ITW Group subsidiaries Foster Refrigerator and Gamko have formed a “strategic commercial alliance” that will see the two brands working side by side in the UK. But what’s behind the move and, more importantly, what does it mean for distributors of both companies? Catering Insight spoke to Paul Veried, ITW’s vice president refrigeration Europe, to find out.
Foster Refrigerator and Gamko have co-existed within the ITW Group for some years now. What prompted the timing of this strategic alliance?
We acquired the Gamko business in late 2008, so really our first full year was 2009. Since then we have been improving the business in the UK, France, Holland and in the export markets, and we thought that the time was right to bring the two businesses closer together in the UK. Part of the reason was we know that the Gamko brand is very strong and it has got an excellent reputation for quality, reliabilty and so on.
But one of the areas we considered that we needed to strengthen was the support that the Gamko brand received. And we knew at the time, even when we aquired the business, that the support in the UK wasn’t as good as we deliver for the Foster business, so as we have gone through the process we have now decided that we want to give the Gamko buisness that same level of support as we give Foster, and that is exactly what we have done.
Is this a UK-only initiative or is it influenced by a broader international strategy?
This is a UK initiative. The situations in France, Holland, export and so on are different, but in fact the operations in those territories already work very closely together, so there is no change of strategy. In fact, in many respects it is bringing it in line with existing strategy.
The company has said it expects the move to further enhance the operational efficiency of the two brands. Where do you expect the gains to come from?
Well, if you can imagine that we have got an operation based out of Manchester, one based out of King’s Lynn and the product is manufactured in the south of Holland, some of the operational efficiencies will come from pure logistics, less administration and the fact that we can leverage both the sales team and promote through a single channel in the form of the dealer network in the UK. Those are the areas that we would be looking at for efficiency improvements.
The two companies have announced that they will share management expertise moving forward. How will that work?
Bascially I am responsible for all of these businesses in Europe. And what we will be doing is sharing the expertise that the Foster business has in the UK with the Gamco team.
Can you provide any details of Gamko’s infrastructure in the UK up to now? What sort of staffing was there?
I can’t give you those figures unfortunately. I can’t quote you turnover or number of people.
What has happened to Gamko’s office in Manchester? Has that closed due to this alliance?
The overall impact on employment is neutral, but we have closed the office in Manchester. The distribution and the support that the dealer network gets and our customers get will basically be the same as they receive from the Foster business going forward. The Foster sales team is involved in selling and specifying the Gamko product, so the product will receive the same levels of support as the Foster business currently does.
Have any Gamko staff relocated to King’s Lynn or have you had to make redundnacies?
There have been a few redundancies, but there have been a few recruitments as well, so the overall effect is neutral.
What was Gamko’s route to market before this alliance?
Gamko was primarily a dealer-based organisation anyway. And that is part of the reason why what we are doing fits so well with Foster because Foster sells through the dealer network in the UK. We try to give a lot of support to the UK dealers and we will be doing exactly the same now with Gamko. And, of course, the vast majority of dealers that Gamko deals with, Foster already deals with as well. So there will be a lot of co-operation and a lot of synergies between the two brands through the UK dealer network.
Will this make it easier for Foster distributors to access the Gamko range than before?
If they haven’t had access to it or they weren’t aware of it, then it will certainly be available through the Foster dealer network now. And we have actually combined things like some of the literature and price books and so on, so when a dealer gets a Foster price book they will have the Gamko pricing in there as well. Access to everything is a lot easier.
Is there much overlap between the two product lines?
There is zero overlap. Foster doesn’t have any back bar ranges — we do ice makers and a few things like that, but no true back bar equipment, whereas Gamko is solely back bar. There is no issue there at all, which again makes the whole approach that we are taking much easier. Gamko offers a wide range of products. They sell what you might classify as standard back bar units, like Maxiglass, but they also have unique products like the Flexbar, which is a very good quality, bespoke-type back bar system.
Click on page 2 below to continue reading article. [[page-break]]
What opportunities do you think this alliance will present to Foster dealers? Will it potentially help them to get into new markets?
The first thing I would say is that for the current Foster dealers that know the Foster product already, the advantage that Gamko brings is that it is a very similar brand. It is very high quality, it is ECA approved, so a 90001 and 14001 company, so when you look at the two brands they are very closely aligned. If a dealer is selling the benefits of Foster then it is a natural thing to then move onto the benefits of Gamko because they are very similar types of company.
The second thing is that dealers will get the support, back-up, delivery service and response times for Gamko that they would expect from Foster. What that means is if they have been into the back bar market but not necessarily in a big way, there is now an opportunity for them.
On the flip side, what does this mean for existing Gamko distributors? Should they be concerned about facing more competition from the Foster channel?
I don’t think so, I think there is enough competition out there already. I don’t think it makes any difference as far as that is concerned. I think Gamko is an extremely well-known brand and I think the fact that we have made this change makes absolutely no difference to the competitive environment.
Do you plan to make any changes to Gamko’s brand identity as part of this?
No. Gamko has always had a very good reputation for quality products and that is the reason the business was acquired in the first place, so there is absolutely no reason for us to want to lose such a good brand.
Are there any other brands within the portfolio that you manage where you would consider carrying out a similar joint exercise?
Not at this moment in time. ITW is the largest catering equipment manufacturer in the world with lots and lots of brands. Hobart is obviously part of our branding and lots of other companies as well, so we tend to operate and keep the brands that we acquire, and we certainly keep them focused on their market segments. And that is exactly what we are doing here. But what we are doing in addition is providing the support behind it and getting the operational efficiencies from that.
What is your outlook for the business and the market in general for 2013?
The outlook for us remains positive. Foster has consistently grown its business, even through the 2008-09 recession, and through the latest recessions we have continued that. We have a very strong segmented focus to the market and I think some areas have been a little bit slower. Obviously the public sector has been a little bit slower than previous years, but other areas have been growing faster, so overall we are very positive about 2013.
Production model escapes changes
Foster Refrigerator boasts one of the most sophisticated manufacturing plants in the UK market, with a multimillion pound upgrade of its facilities taking place ahead of last year’s launch of the G2 product range.
Given the announcement that Foster and Gamko will begin working together in the UK as part of a strategic alliance between the two ITW brands, it would be easy to jump to the conclusion that the pair might be looking at ways to combine their manufacturing expertise in the name of cost and efficiency.
But Foster’s managing director and ITW’s vice president refrigeration Europe, Paul Veried, rejects any suggestions that Foster will begin producing Gamko bottle coolers and refrigeration equipment in the UK.
Veried says that Gamko equipment is currently produced in the Netherlands, where the brand has been based for more than 50 years, and he insists there are no plans to change that.
“If you look at the two brands, the home market for Gamko is Holland,” he says. “They have a very strong market share there and the manufacturing has been there since about 1958. It is a very efficient and very modern plant, so there is no intention to relocate manufacturing.”
Headquarters: Etten-Leur, Netherlands
Sales offices: Netherlands, France, UK
Focus: Cooling equipment for the hospitality trade
Key branded product lines: Eco-Line, Flexbar, Maxiglass
Support: Full appliances come with a two-year parts and labour warranty and an additional 12 months parts-only warranty
Fast fact: All products meet the requirements of climate class N. This implies that they can optimally function in surrounding temperatures of up to 32°C / 90°F