OATCAKE maker Nairn's is mulling a move to a larger gluten free factory to accommodate its growth expectations over the next decade.

The company already has a dedicated gluten free bakery, storage and packaging area at its current site in the Peffermill area of Edinburgh.

However there is limited scope there for additional expansion with the physical site hemmed in by roads, a burn, an old folks home and the Edinburgh University playing fields.

Nairn's spent around £600,000 last year effectively doubling the capacity of its gluten free arm with the improvements including additional packing facilities and an extra oven.

At the moment it is running 24 hours a day from Sunday evening through to Friday to maintain supply to customers in the UK and overseas.

The business, which employs around 200 people, recently posted a £3.5m uplift in annual sales to a record £22.1m with more than 60 per cent of that growth coming from gluten free lines.

Martyn Gray, managing director, said: "With gluten free we need to decide where we go over the next 10 years not just over the next two or three years. We are looking at the next stage of that development and where we go next.

"The gluten free factory is fit for purpose for the next few years as that [investment] has bought us some time. We need to think beyond that and is the factory big enough?

"It probably isn't if [the market] continues at the rate it is going at."

Mr Gray outlined that Nairn's is confident the gluten free market still has a great deal of growth potential in its home market as well as abroad.

He said: "Our belief is that it will continue to grow as underlying it all is there are people who are genuinely intolerant, it is not purely about fashion.

"There is an underlying part of the market that cannot have gluten and will react badly to it. Then there are people who are mildly intolerant. Then there is the market about people who think it is a healthier lifestyle.

"Our view is that they will [all] continue to grow and we need to invest to get the right products going forward for that."

Nairn's has also recently shifted its export lines into the United States to almost entirely gluten free products because of the soaring demand there.

Mr Gray said: "What we found out in America that there has been even more of swing towards gluten free than in Europe.

"We have just about changed all of our range in the States to supply gluten free products rather than just wheat free.

"There has been a huge period of integration, getting new listing in relevant wholesalers and suppliers and we are just about now moving ahead with it. That has been a massive change for us."

While Mr Gray was keen to stress that plans for a new factory are at a very early stage he suggested Nairn's would be likely to look to raise external capital in order to fund any major move.

Its factory investments in recent years have been funded from its cashflow and reserves.

He said: "If we decide to move to another factory then I think we would need to look at borrowings for how we fund that but there are plenty of options."