Barry Connolly knows all about timing. He's the man who brought Red Bull to Ireland and Kopparberg cider to Ireland and the UK, where it is now the best seller after Strongbow). Prior to that, he was the man responsible for the heely shoes fad among young girls.
And timing has been crucial to the success of Fulfil Nutrition, which was sold last week for a sum understood to be in the region of €160 million.
It was Connolly who spotted space in the market for a "better for you" impulse-purchase nutrition bar, particularly one that was not specifically aimed at the gym user market. The concept was worked on within his Richmond Marketing Group with Niall McGrath and Tom Gannon before the team was happy they had a working product.
Created just six years ago, it was fronted by McGrath and Gannon, but Connolly was always the dominant shareholder, owning 50 per cent of the business from the outset. The clue was in the name of the parent company, Bartoni, an amalgam of Barry, Tom and Niall even if it sounded like a brand of Italian pasta.
Staying in the background is what Connolly does, pushing the brand not the man.
But, just two years into the business, Fulfil found itself in the headlines for all the wrong reasons. The company was doing well. It had turned over €12 million in its first year of trading and that had jumped to €21.7 million by the end of 2017.
Expansion strategy
The catalyst for the dispute was a disagreement over the pace of expansion. The company was already expanding rapidly in the Irish market and McGrath and Gannon were eager to continue with a plan that looked well set to deliver financial return for the risk the founders had taken. Connolly saw a bigger opportunity. And he was pushing for an even more aggressive expansion plan, one that would see Fulfil break into new markets in a move that would clearly require much of the company’s returns to be ploughed back into the business.
Connolly understood that while being a big player in Ireland was certainly a success, if the business wanted to attract interest from major food sector investors, it needed to prove its case in a major market. The UK was the obvious one.
McGrath and Gannon left the business and with AIB, which helped buy out the two executives' shareholdings, Connolly persevered with his vision. And he put his money behind it, personally funding part of the takeout to leave him with a shareholding of about 75 per cent.
Industry veteran Brian O'Sullivan was brought on board to lead the team. He had spent a decade with Cadbury Ireland before moving to a global position with its parent group, Mondelez. He brought the advantages of knowing the sector, knowing the Irish business environment and also being familiar with the international markets that Fulfil was targeting.
But Connolly stayed very actively involved in the business, part of the team that personally pitched to the first key clients in the UK, including newsagent WH Smith and supermarket Asda. Struggling to get their pitch across the line, Connolly reportedly told the then head of impulse buying at WH Smith: “Don’t be the guy who turned down the Beatles.”
WH Smith and Asda both bit in what was a critical piece of the puzzle for Fulfil, which assiduously markets itself as a protein-rich product for the general market rather than for a niche health and sports audience.
Covid setback
When Covid struck, survival became the issue. With many retail outlets closed and impulse purchases seeping away, sales plummeted. Insiders recall weeks in the early stages of the pandemic when just 100 boxes of bars were being ordered from the group.
Cutbacks were inevitable and O’Sullivan decided he would be among them. It was a grim time for the business, with sales falling by more than a quarter to €22 million, the first financial setback for the fast-growing business, with Connolly again taking a more hands-on role.
But Fulfil survived and has bounced back strongly as restrictions were gradually lifted. Its growing UK presence, led by Steve Rich, has been critical to that success, as life returned to normal more quickly over there.
Overall, Fulfil expects sales to have jumped by 70 per cent last year to about €38 million. And that is just the group turnover. At a consumer level, sales of the bars are a multiple of that.
Fulfil says it is now the leading brand in the impulse purchases category in Ireland, having moved ahead of Cadbury and Mars. In the UK, it is ranked fifth in the same market segment after just three years and is reportedly the fastest-growing confectionery brand there.
The company is selling a million cases a year in each, and also does business in the Netherlands, Belgium and, to a smaller extent, Australia and the Middle East, on top of the nascent US business.
Choosing a suitor
That success delivered the interest from rivals and from private equity, as Connolly had predicted when first pushing for an aggressive international expansion.
Why sell now, just as the company is growing sales dramatically?
Connolly has always argued the need to “prove” the company’s ability to break into the major confectionery markets. However, he was realistic enough to know that a company the size of Fulfil would always have to do that on a piecemeal basis. And there was always the danger of being beaten to the punch by rivals.
Selling to a group with deeper pockets – and especially one with an extensive global network – allows Fulfil to expand more rapidly and globally.
That being the case, it was little surprise that Connolly and his team opted for Ferrero. Like Mars, it is a family business, currently run by Giovanni Ferrero, the third generation at the helm. Mars had already made its move in the "better for you" segment with its purchase of Kind, and the other industry heavyweight, Mondelez, had bought UK brand Grenade last year.
The reported €160 million all-cash payout was not unattractive either. Even for AIB, the €30 million-odd payout is understood to have delivered roughly a fivefold return on the investment it made in 2018. For Connolly, it means another good payday, close to €120 million before accounting for his investment in the business over the years.
Partner
And Connolly’s Richmond Marketing is not getting out of the Fulfil game entirely. It will remain the long-term distribution partner for the business in Ireland.
The company’s 40 staff spread across Ireland and Britain will transfer across to the Italian confectioner’s business, including the team tasked with developing new flavours at its low-key Irish base in Dublin’s Park West industrial estate.
They are keeping busy. Late last year, the company brought out the first “crispy” flavour in the European market, including Ireland. Two more have hit the shelves already this year: white chocolate and peanut, and dark chocolate and salted caramel.
And Connolly is also keeping skin in the game in North America, where Fulfil retains control of the business in partnership with Hershey. Connolly has 60 per cent of that side of the business, with Hershey holding a smaller stake but providing what one industry veteran called the tracks it has laid across the retail market over its 125-year-plus history.
