Diversifying has helped The Lanchester Group grow
Starting from the front room of their house in 1980, Tony and Veronica Cleary have seen their family owned business grow from a start up to the current £32million turnover, Lanchester Group. It has become a significant North East business that has won plaudits from major UK retailers, introduced innovative green energy solutions and employs hundreds of people in County Durham.
The Group has diversified and is made up of five companies; Lanchester Wine Cellars, Lanchester Properties, Greencroft Bottling Company Ltd, Lanchester Sales and Lanchester Energy.
There is little doubting that the enthusiasm and passion of husband and wife team, Tony and Veronica Cleary have played a significant part in the company’s huge success. Managing director, Tony explains: “The key things we have always been good at are hiring good people, making decisions, and ensuring quality is at the heart of everything we do.”
Their core business, Lanchester Wine Cellars was started in 1980 from the Cleary’s home in Lanchester. Veronica was a teacher and her salary supported the couple while they set up their business, initially selling direct to local retailers, pubs and clubs. Tony was no stranger to the liquor trade as he had headed up the regional sales force for United Rum Merchants, but at the age of 26 he saw an opportunity in the rapidly expanding wine market.
Tony explains: “In the early ‘80s, sweet table wines such as Liebfraumilch and Blue Nun were all the rage and we bought our selections direct from wine producers in France, Germany and Italy. By the end of the ‘80s the New World wines were starting to become popular as their easy drinking style attracted a more sophisticated palate and we saw an opportunity and took the decision to become New World specialists.”
The business was growing, however times were tough and in the first two years they never took a salary, ploughing all their money into the business, so when the time came to expand the company, the Clearys hit their next hurdle of attracting the necessary capital to invest in warehouse space.
Tony said: “In the early eighties, there was a time when interest rates went as high as 16%, but it was easier to borrow money from the banks then. In those days you went to see your bank manager and they backed the person and the business idea if it had merit. They had the authority to make their own decisions and we had a good working relationship with our bank manager. Without that support, we probably wouldn’t have got started. It is much tougher today.”
To house the expansion in the business they opened their first bonded warehouse in 1990, a 40,000 sq ft unit in Philadelphia, near Washington, Tyne and Wear. At the same time they bought The Old Court House, the largest building in Lanchester, which still holds the village library to this day, and moved into the office suites on the first floor. This wasn’t an ideal scenario, with the warehouse and offices 15 miles apart, but it helped them get to the next stage of their growth. In 1999, they decided they needed a location where the whole business could operate on the same site.
Veronica explains: “In 2000, we found the 14 acre Greencroft Industrial Estate. It was far too big for our needs at 450,000 sq ft site but it was in the area where we wanted to operate from, being only 3 miles from Lanchester. The logistics of travelling between the sites was becoming a bit of a headache and we wanted to save time and do things more efficiently.”
“When we acquired the site in 2000 we had to buy the whole site; it was a mess, and a risk. There were no tenants in four big units and the roof used to leak like a sieve. We renovated it in two sections, investing £1.2m on re-roofing, and the projects took five years, but it was certainly money well spent, as it has allowed us to take the business to another level.“
Tony continues: “We knew the importance of not being a single entity business and ending up as a ‘one trick pony’, so we concentrated on getting the properties in order which gave us the security for lending and then we were able to explore other ventures.”
In 2003 they bought the small bottle business of H&A Ltd. of Preston and the same year began one of their major new companies, Greencroft Bottling Company Ltd. This worked perfectly as they now had the facilities to bottle their own 187ml bottles. On acquiring Greencroft and expanding the company, Lanchester Wines quickly took advantage of a skilled local workforce. Engineers and managers were employed from a recently closed bottling plant in Felling, and production line staff recruited locally.
Tony said: “ Mark Satchwell is the MD of Greencroft Bottling and with the help of his experience and passion for quality, we are now bottling 24 hours a day and exporting to countries such as Dubai, Sweden, Norway, China, Thailand and the Caribbean. “
The company specialises in bottling for top name brands, and the Clearys are delighted that they are the only site in the world outside of Australia to bottle the famous McGuigan Estate Black Label wines.
“We have always bought the best kit and now have the most modern bottling equipment in Europe. We train our people well and I’m delighted to say that we are the first UK wine supplier to be awarded a coveted ‘Blue’ after a two day audit by a major supermarket for the quality of our production facilities.”
As the business has grown the Clearys have been very aware of the need to diversify into other areas to spread the risk.
Veronica said: “We could see that the gift hamper market would fit well with what we do and we set up Lanchester Gifts in 2007. This part of the business is managed by Ruth Peyton, who oversees production, is very creative and produces a high class end product. We are now supplying household names such as BHS and have two retail websites called first 4 hampers and first 4 gifts, which sell beautifully produced hampers and gifts to the retail and consumer markets. The business is going from strength to strength, currently turning over £3.9m with projections of £6m for next year.”
The company has continued to grow and the workforce is now 250 people, so is a major private sector employer in the area.
The Greencroft Estate is also situated on top of a hill, so can experience high wind speeds and this inspired managing director Tony Cleary to transform the site, into what is probably the ‘greenest’ bottling plant in Europe. The idea came to Tony when he was recuperating at home from major surgery.
“I was watching a television programme about wind power and realised the potential of our own site. It totally changed our thinking and when we built our new head office in 2008 it was designed with a green agenda using innovations such as motion activated lights, reflective glass which insulates the building and solar panels that generate around 38,000 kw a year all year round.
“Our aim is to become the world’s first carbon-negative drinks business and in January this year we installed the first of three wind turbines which will serve the site near Annfield Plain.”
The operation is part of a £4.5 m turbine project for Lanchester Energy, which complements the investment already made in a heat pump to modulate office temperatures, solar panels, the installation of electric vehicle charging points and the use of a low emission Volvo fleet of vehicles. The company is also operating its first Tetra Pak wine-filling line which is also the only high speed Tetra line in the UK.
Tony added: “Our aim is to use sustainable wine and we can fit 33,000 Tetra Paks on one truck compared with 22,000 bottles, so for every million litres of wine you can take 65 trucks off the road. Our goal is to be the greenest liquor company in the world.”
Building good relationships with their professional advisers has been important to the Clearys as they have developed the business.
Tony said: “We were introduced to Square One Law when we were looking for advice on setting up these websites. What we like about the firm is that they are able to offer advice for all our business needs and Alan and the rest of the team show a personal involvement. We certainly feel that Alan understands our business and is in it for the longer term.
“That’s important to us, because Veronica and I are in this for the longer term. We have spent the last 33 years building up the group and aspire to be a world class business. We are not looking to sell out to the highest bidder who would strip out the assets. We have a responsibility to the people we employ which is why our green credentials are so important to us.”
Alan Fletcher comments: “Working with the Lanchester Group of companies over the last two years has been a fascinating experience. To work with people who are tirelessly pursuing new opportunities and making them happen in a benign economic environment is refreshing and shows what can be achieved through ambition, energy and hard work.”
Veronica, who still personally conducts all interviews for new staff, said: “Employing the right people has been crucial in our development. We have a great management team and Audrey Close, our finance director, has been with us for 28 years. As a major local employer in this area we have many families working for us and we run a profit share scheme which undoubtedly helps everyone feel part of the company.”
Tony concludes: “We are excited about the future and now want to concentrate on growth. We have opened a Manchester office and are looking for a £50 million turnover this year and up to £70m next year. Most importantly, we enjoy what we do and have a great team of people working for us. My advice to anyone in business is when you have good people, let them get on and play to their strengths – don’t get in their way.”