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Nairn's expands after gluten-free growth

OATCAKE maker Nairn's is spending around £600,000 adding new premises and equipment to accommodate growth in its gluten-free arm.

success: Oatcake maker Nairn's is expanding following a growth in sales of its gluten-free range of products.
success: Oatcake maker Nairn's is expanding following a growth in sales of its gluten-free range of products.

The company has taken on a site close to its existing facilities in Edinburgh to keep up with demand in the specialist sector.

It has also moved to a 24-hour working period from Sunday evening through to Friday, which has contributed to around 30 jobs being created in recent months.

The gluten-free arm is an entirely separate plant from the main factory to avoid contamination.

Now an additional building will be used for storage, which will allow for more baking space to be added in the gluten-free factory.

Accounts recently filed at Companies House for Nairn's Oatcakes showed the company recorded a more than 6% rise in turnover to £18.6 million in the 12 months to June 1, 2013. That was up from £17.5m in the previous year.

Pre-tax profits dipped from £1.81m to £1.7m, which the Edinburgh company said was mainly as a result of higher ingredient costs that it had chosen to not fully pass on to customers.

Martyn Gray, managing director, said: "The core oatcake business has been pretty steady but the real sales growth is through our gluten-free range.

"Two new biscuits we produced, called Biscuit Breaks, have gone from strength to strength and the core oatcake range in gluten-free has been very successful as well."

Mr Gray, who replaced Mark Laing as managing director in June 2013, said the volatility of the commodity market meant input costs rose during the financial year.

He said: "We had a small price increase but have not recovered the cost of those inputs. We are very sensitive that we are just out of recession and that we want to be competitive on price.

"Therefore we have absorbed some of those [ingredient] price increases to make sure our retail pricing remains competitive at the point of sale."

Along with "general maintenance", Nairn's invested in a gluten-free cracker line in the financial year as well as an automated packing line in its main factory.

The accounts note capital spending in excess of £522,000.

Mr Gray said the gluten-free cracker line was now producing products that had been well-received in the market place, while the automated line had improved efficiency.

The expansion of the gluten-free market in recent years has meant Nairn's has decided to make further investment in its current trading year.

Mr Gray said: "We have just signed a new agreement for a new lease a further 100 yards down the road from our gluten-free factory.

"We are going to use that for storage and cereal production and make the current site purely based on baking.

"That gives us more capacity and we are investing around £600,000 in this financial year to increase the capacity further."

Nairn's supplies UK-wide into all the major supermarkets while Mr Gray highlighted Tesco, Sainsbury's and Waitrose as being particularly important in the gluten-free market.

It also exports to Ireland, the US, Canada, South Africa, Australia, New Zealand and the Middle East.

Its gluten-free porridge is available on prescription from a number of health authorities around the UK.

The accounts show Nairn's paid £1.05m of interim equity dividends in the financial year, up from £600,000.

Net debt widened from around £51,000 to £161,000.

Average staff numbers in the financial year were at 155, up from 148, with employee costs rising from £4.4m to £4.9m.

Directors' remuneration was up from £812,234 to more than £1m, with the highest paid seeing their emoluments go from £199,532 to £226,581.

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