Colony’s flame is burning brightly
Colony Gift Corporation supplies some of Europe’s biggest retailers with its scented candles and candle accessories.
Located in the picturesque Lake District region of the UK, the company employs 190 people that are spread across a showroom, factory, warehouse, a research and development department, and a design studio. As one of the market leaders in the home fragrance market, it goes into 2008 with a revamped manufacturing strategy, a long-term business plan and a renewed sense of optimism.
Candle maker, Alan Williams, founded the company under the name Nice Things, in 1980, from his shed in Backbarrow, Cumbria. It was a decision borne from frustration at being unable to source quality candle products for his hotel business. After nearly two decades of growth and expansion it was sold to the American candle manufacturer, Blyth Industries. The company reverted back to British ownership in December 2006 when it was bought by Mike Armstead and Simon Martin of Lighthouse Holdings Ltd; in their year in charge they have transformed the operations.
Outlining the changes made, Simon comments: “When Mike and myself purchased this business it was turning over £16m and making a £4.5m loss. What we’ve done is closed one of the warehouses and slimmed down the manufacturing site from 62,000 sq ft to 21,000 sq ft – that may sound like we’re pulling out, but that is not the case at all. What we found was that there were a number of machines either not being used properly or not at all, so we have consolidated our manufacturing into a more productive area, it is leaner and more efficient.
“During 2007 we’ve tried to eradicate the loss the business was making. This financial year we should make a loss of less than £0.5 million, that is a massive improvement,” he says. It is a positive trend that is expected to continue. “We have a five year plan in place and now we have the cost base under control the aim is to boost sales. We are confident that we will make a profit in excess of £0.5 million in 2008 and that by the end of 2012 we will be making a profit in excess of £2 million. At its peak this company was turning over £26m a year but the market for fragrance candles in Europe has not shrunk so business has been lost to our competitors. By getting that back there is the potential for a £26m-£30m a year turnover,” Simon continues.
“A new fill line for the factory will dramatically increase production and help Colony achieve those targets. This piece of machinery fills glasses, ceramic pots, and moulds with liquid wax which ultimately produces all our wax filled items and pillar candles. At the present time around 1000 items are made an hour; the new line will increase that figure to 5000. “It will obviously improve our level of production a massive amount without costing us a huge amount of money,” he enthuses.
British manufacturers have long complained that they are at a disadvantage to companies in the Far East and Eastern Europe due to extensive legislation and spiralling costs for raw materials and labour. Although he still believes more could be done to make manufacturing easier in the UK, Simon thinks that the tide is slowly turning. “It is still red tape galore in this country, however in the last 18 months costs overseas have increased rapidly. People are beginning to realise that they should be getting paid more than they are, therefore they have incurred price rises on raw materials, logistics and salaries. All of a sudden we have a more competitive factory than we did a year ago.
“By making the manufacturing leaner, as we have done, and investing in new machinery, we can compete with the companies in the Far East. Another factor we have to take advantage of is the scenario we now have where major retailers like Asda, Sainsburys, and Tesco who want to buy, and be seen to be buying, local and greener products,” he says.
Customers like these have plenty of products to choose from; the Wax Lyrical brand is targeted at high-end retailers and is comprised of a range of fragranced products including wax fill candles, pot pourri, tealights and incense. Essence, the entry-level range underpins Colony, which fits firmly at the centre of the global candle market.
Further strengthening of the product range is ongoing, as Simon explains: “We have introduced a Made in the Lake District range which will go into stores this month, including the National Trust. We have also gained a license with the Royal Horticultural Society; we will be producing a range of candles in co-operation with them, which will bear their logo. Everything is going back to Britishmade products.”
Analysing the key strengths of the company, Simon is quick to highlight the efforts of the inhouse research, development and design team, commenting: “They identify the trends early and are able to develop them quickly to market before our competitors, that sets us apart from them. Any giftware company depends on innovative design, the team we have here who are responsible for that are very well respected.”
Asked how the market has changed in recent years, Simon admits: “The sector is dominated by wax filled items now, we still sell the typical pillar candles but in all honesty the traditional dinner candle is almost dead.” Under his leadership the same cannot be said about Colony.
Colony Gift Corporation
Products: Candles and candle accessories
Sites: Lake District, UK