By Karen Peattie

SALES at Edinburgh-based Vegware, which supplies single-use, compostable packaging for caterers, have rebounded to pre-Covid levels with its strong recovery boosted by “decisive” action during lockdown to stave off losses by diversifying into new sectors, and also capitalising on the growth of the food and drink takeaway market.

The firm, recognised as a global specialist in plant-based compostable foodservice packaging with operational bases in the US, USA, Australia and Hong Kong has distribution throughout Europe, the Middle East and the Caribbean, experienced a “temporary” slump in revenue in the immediate aftermath of the first lockdown last year as the hospitality sector shut down and demand for products such as biodegradable coffee cups and sandwich packs petered out.

However, accounts for the year ending January 31, 2021, reveal that despite turnover dropping by 14 per cent compared to the same period in 2020, underlying operating profit was £2.5 million, up from £2.4m the previous year.

Total sales of £36.4m represented a fall of 14% from the previous year due to Covid. Vegware’s UK sales fell 17%, from £26.7m to £22.1m, while exports experienced a drop of 9% from £15.8m to £14.3m.

Joe Frankel, the company’s founder and chief executive, said: “In line with many other businesses operating in the hospitality and catering trade, the Covid-19 outbreak and initial lockdowns led to temporary reductions in the company’s sales revenue during March and April 2020.”

But as employees adopted homeworking and hospitality venues were shut, Vegware reacted quickly and focused effort in replacing the temporarily lost volume by securing new business in the education and healthcare, Mr Frankel said. He added: “Product development focused on new solutions targeted at the increasing demand in the takeaway market.”

Mr Frankel noted that the “global Covid-19 pandemic had a short-term adverse effect on sales revenues, with key markets enduring prolonged periods of restriction which have affected many of our customers and distributors”. However, sales have seen a strong recovery with a return to pre-lockdown levels.

Predicting accelerated growth in the second half of 2021 with clients appreciating the role that single-use products have in mitigating hygiene concerns, he added: “Sales growth is anticipated to show a significant upturn on pre-lockdown levels as hospitality reopens and travel restrictions ease.

“Sales are now ahead of pre-Covid levels and profitability has exceeded pre-Covid levels – we consider that the company has sufficient funding in place to meet the anticipated growth.”

Mr Frankel also pointed to new EU legislation surrounding single-use plastics coming into force this year as representing a “significant opportunity for further growth for the company”. Vegware’s products, said the firm, are suitable for commercial composting with food waste. He said: “The sustainable packaging market is set to grow significantly as a result of continued new green legislation.

“Vegware’s demand is also being driven by big-name brands and manufacturers looking for innovative ways to reduce their environmental footprint, tapping into the many benefits and advanced technical properties compostable products have to offer. Continuous advancements and innovations in new materials, with improved functionalities, mean there is now a compostable alternative for almost ever conventional plastic material and corresponding application.”

The firm’s Close the Loop service, noted Mr Frankel, which collects customers’ used takeaway packaging to turn into compost, is becoming an “increasingly important” part of its client offer.