Ferguson Hits the Sweet Spot

By Tamsin Brown, Daily Mail, London

Jan. 17–Tate & Lyle chief Iain Ferguson is looking forward to the day he can wear a suit made of the corn-based fabric developed by his firm and Lycra-maker DuPont.

In fact, he’s a bit jealous of his opposite number at the American giant who is already the proud owner of one.

“He’s stolen a march,” the T&L boss complains. “But he’s smaller than I am. That’s his excuse. He said it required less cloth.”

The suit story underlines the massive changes at Tate & Lyle, best known for bags of sugar and Golden Syrup.

Forget the supermarket staples, the company’s scientists have taken the firm down a completely different route.

Tate’s cutting edge compounds can be used in face creams, detergents, and even car bumpers, while the new fabric made from it will probably end up in millions of yards of carpet.

And let’s not forget Splenda, the zero calorie sweetener that is perhaps Tate’s most lucrative innovation.

It is a company built in the image of Ferguson, a chemistry graduate who honed his commercial skills climbing the ladder of consumer products giant, Unilever.

He has been at its helm for three-and-a-half years, joining after a period of upheaval when some 30 business were sold off.

Since taking the reins, shares have soared more than 150pc as steps taken to drive sales in the highly profitable food ingredients division paid off.

This has done more than offset the decline of the once-dominant sugar business, which has been hit by market reforms introduced by Europe.

Sugar is now less than a third of profits — the big earnings drivers are sweeteners and starches.

Ferguson says Tate needed to change and can pinpoint one initiative that has made a dramatic difference to the business.

When he joined he demanded executives dealt directly with consumers to find out what they wanted.

“We have moved from a company that would respond quickly to customer requests to one that takes innovative ideas to our customers and helps them to develop new products,” he says.

It is an approach that has seen the company’s boffins come up with a range of low-calorie sweeteners and starches that can replace the fat in products but keep the creamy taste when necessary.

One example is the low fat yoghurts that line supermarket chiller shelves. Consumers, Ferguson-has found, won’t compromise on taste.

That’s why zero-calorie Splenda, made from sugar and used in Diet Coke, has been a huge success for Tate and one of the key catalysts for the share price.

Ferguson said: “We believe it could be the most ubiquitous brand in the US just because it is on so many other people’s products.”

Splenda, developed in partnership with American cotton bud maker Johnson & Johnson, keeps a battery of lawyers employed protecting the valuable patent.

A Chinese firm has already made attempts to copy the product — and it won’t be the last to take a bash at producing a cheap alternative.

“Our strategy is to defend the intellectual property to the end and to make sure the cost base is built low so that we can deal with generic competition,” Ferguson says.

A rejuvenated Tate still only has a 7pc to 8pc share of the fragmented £7bn food ingredients market — giving plenty of headroom for growth.

There is no doubt the big beast of the industry has taken more than a cursory interest in the revival of Tate, but the company’s ambitious to be a consolidator, rather than a trophy asset of a giant multinational.

Deals are in the offing: “It is something we’re working on all the time we’ve made a number of small bolt-on acquisitions.”

In the meantime, the men in the lab coats are the key to expansion. The firm has moved into industrial markets, particularly in green biofuels.

Tate produces 67m gallons of ethanol a year but this will rise to 200m in the next two years as it opens a new plant and expands an existing one.

It has even helped develop a substance that turns the meat from farmed salmon pink, from its natural grey colour. Some would ask why. But Ferguson is amazingly bullish about Tate’s latest raft of innovations.

“We’re linking with partners like DuPont to access different end markets and there really isn’t a market in the world we can’t get to,” he proclaims.

“Traditionally T&L has been 70pc food and 30pc industrial. If that really takes off things could swing around a bit.”

Ferguson is also taking social responsibility seriously, though he was on the green bandwagon long before Marks & Spencer boss Stuart Rose and Tesco’s Terry Leahy scrambled aboard. He nurtured a passion for sustainability growing up on a farm in Scotland.

“I always liked the idea of doing what you can with what you can produce from the land.

We didn’t bring much external input onto the farm, we had our own water supplies, grew timber and so on.”

However it is only recently he has been able to put into practice the green ideas that germinated in childhood. The rest of the time was spent honing his business skills.

After studying chemistry and psychology at St Andrews, Ferguson came south to become production manager of Unilever’s vegetable oil mill in Selby, Yorkshire.

Life became far more exciting when he was promoted to chairman of the Anglo-Dutch giant’s tea and oil plantations business and travelled to countries such India, Kenya and Zaire.

“I really liked that job. It was a real opportunity to see a business that was contributing to the base economic growth of a series of countries.”

Becoming the head of Birds Eye Wall’s was a bit of comedown for his wife and daughter who used to travel with him from time to time between the plantations.

“The next trip we went on was to Skegness, my daughter was about eight and she said ‘you call this a promotion.’ “

After spending more than two decades at Unilever he decided it was time for a change.

“I was always conscious that I didn’t want to be one of those people you meet at a cocktail party occasionally who had been there 30 years and was always talking about how they wished they moved.”

While his scientific background means Ferguson is always coming up with ways for Tate to make money, his passion for growing the ingredients arm seems to stem partly from a personal enthusiasm for food.

He coos over the sumptuous lunch served to us by Tate’s catering arm, though like many men, Ferguson will opt for a convenience meal when his wife Catherine is out.

“If I know I’m going to be on my own and I’m going through Waterloo, there is an M&S Simply Food which I’m steadily working my way through — it’s fantastic.”

He admits: “The issue is you’re out a lot so how do you contain the amount you eat. We’re over-nutritioned but we don’t want to eat less.”

Luckily, Tate has a team of scientists constantly finding ways to help us keep eating without piling on the pounds.

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