DRIVING INTO the old market town of Newcastle West near the Limerick-Kerry border, a sign welcomes visitors to the “home of Ballygowan”, the birthplace of one of Ireland’s best-known brands.
But tucked away just a few miles further along on a small country road is another Irish food and drink industry success story.
Though well-known to those in the catering and food industry, low-key food supply company Pallas Foods was thrust into the spotlight in April 2009, when it emerged that the Irish food distribution business had been acquired by American-listed food distribution giant, Sysco. Though the sum was undisclosed, the rumoured price tag was close to €200 million.
“Sysco made contact in November 2007 and visited us the following January. By March 2009, the deal was signed,” says Tadhg Geary, commercial director of Pallas Foods. “Sysco had been looking at 120 companies globally, and invited four companies to travel to their headquarters in Houston. They bought one, which was Pallas, their first acquisition outside the US.”
Though Geary remains tight-lipped about the terms of the sale – announced as the Irish and global economic picture had taken a turn for the worst – it was a major coup for the tight-knit Geary family, who had built up Pallas Foods to be the largest food service distribution group in the country. The origin of the business dates back to the early 1980s when Tim Geary, who had been working in the poultry business, began breeding turkeys. By 1985 two of the four Geary sons joined the business which had expanded to slaughtering and selling turkeys. “Essentially we were running two businesses simultaneously, a poultry farming business, and a distribution business to sell the products,” says Tadhg Geary. “Within a year of selling turkeys, we started selling beef and then lamb, developing our portfolio. We exited from processing in 2002 and just focused on distribution.”
Today, all four Geary sons, as well as their father Tim, continue to work in the business. A condition of the sale to Sysco – which included an earn-out clause – was that management was to stay in place for up to five years. “It’s been a very smooth transition. Very little has changed. We still have the same management in place, and we have maintained staff numbers at just over 500, and at the moment are actually increasing our sales force.”
Observing the operations of the company from their head office in Newcastle West, it’s easy to see why the new owners have made minimal changes to the day-to-day running of the business. Pallas Foods is a tightly-run ship.
The 175,000sq ft site in Newcastle West houses a call centre and customer service section, a massive chilled food, frozen and dry products storage facility, and 19 loading bays for the company’s 150-strong fleet of trucks.
From here via nine other depots around the country, Pallas makes 19,500 deliveries a week to its 8,000 customers, which range from small coffee-shops to five-star restaurants and hotels.
“Over the years we have built relationships with our suppliers and our customers, and these relationships are still the key strength of our business,” says Tadhg Geary. Consequently, the hub of the business is in many ways the company’s call centre, he says. “We have 45 people working on the phones. Each is responsible for a certain number of customers, so when a customer rings in they are put through to the relevant telesales agent who they already know and who knows their business. As well as ringing us with orders, we also make calls to our customers in advance to see what they need.”
From here, a computerised system logs the order, and the information is transmitted to the stockroom where the product is selected from the shelves. Each order is then collated and assigned to a delivery route using a bar code, before being collected by a truck for next-day delivery.
On the supply side, Pallas sources its massive stock from hundreds of Irish and international suppliers. Two-thirds of the stock is Irish produced, with many products sold under the Pallas Foods brand. The company employs specific managers for different food groups, employing beef, poultry and fresh food experts who liaise with suppliers. It also has three full-time wine specialists.
“Yes, we have links with major suppliers but we also source a lot of our products from local producers,” says Geary.
One local businessman, Seán South, employs six people in his salad business, and supplies 60 different kinds of fresh salads each day for Pallas. A local bakery employing 40 to 50 staff provides bakery products to the company. Pallas also sources cheese from more than 20 Irish artisan suppliers as well as some of the bigger co-ops and dairies.
In terms of its meat supplies, Pallas has a contract with Larry Goodman’s AIBP to supply beef, though it also has butchers on site to prepare specially-requested cuts of meat.
Nonetheless, there have been some changes as a result of the acquisition. The company is currently in the process of rebranding some of their own-brand Pallas Food products to the Sysco brand. However, Tadhg Geary believes the brand change will in fact benefit Irish producers. “By becoming Sysco approved, Irish producers can now sell their products into other markets in the Sysco network, which is one of the largest in the world.”
Pallas Foods is already shipping product into Europe to some of Sysco’s major customers, evidently one of the strategic reasons behind Sysco’s acquisition of the company.
Geary also believes the acquisition of Pallas Foods can also play a central role in boosting Ireland’s export market. The company has been actively involved in introducing Irish suppliers to buyers in the US market, through Sysco, while Bord Bia is currently working with Pallas to forge further links between Irish suppliers and the US market. For example, Irish company Eco-Burner, which makes innovative gas burners for keeping food warm in the catering industry, is in the final stages of a major deal with a US purchaser which will generate millions in revenue, a relationship facilitated by Pallas and Bord Bia.
In terms of business performance, Geary says the business has performed well, despite the recession. While Sysco does not disclose revenue for Pallas, the company – which was virtually debt-free at the time of the acquisition – had revenues of €155 million before the acquisition. “Turnover has increased since then,” Geary says. He also says that Pallas, supported by Sysco, is open to bolt-on acquisitions in the Irish market. Overall, Sysco had sales of $37 billion (€27 billion) for fiscal year 2008.
Geary is upbeat about the future of the business. Despite the tightening market, and rising commodity prices which have kept up costs, Pallas has kept its customer base, and has added clients in the last year. It is also increasingly offering non-food products to its clients, such as packaging and cleaning products.
Does Geary plan to stay with Pallas in the long term? Sysco has in the past tended to integrate senior personnel from some of its acquired businesses into its central operation in the US. Geary, who spends a lot of his time abroad working with suppliers and sourcing products as well working directly with Sysco, refuses to be drawn on the specific plans for his own future. One thing for sure is that Geary is a man with the energy and enthusiasm for a long career in the food industry. “I love the work and I love the food industry,” he smiles. “I couldn’t imagine doing anything else.”
ON THE RECORD
Name : Tadhg Geary.
Age : 43.
Title : commercial director of Pallas Foods.
Lives : between Dublin and Limerick.
Claim to fame: Part of the most talked-about Irish deal of 2009, when low-profile family-owned Pallas Foods was acquired by NYSE-listed company Sysco for a reportedly recession-defying sum.
Something that won’t surprise you : Loves food and the food industry
Something that will surprise you : He can’t boil an egg
Hobbies : Skiing, reading and learning.
Source: newsroom - meattradenewsdaily.co.uk
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