Tyrrells won't do a Cadbury and stunt UK production following US takeover

Britain, as John Mayor once described it, is a country of warm beer and long shadows on county cricket grounds. Few eyebrows would have been raised had the former prime minister described the UK as a country of crisp lovers, for it remains a very British habit.

So when Tyrrells Group, one of Britain's most recognisable crisp producers since launching in 2002, was bought by US-based Amplify Snack Brands for £300m ($374m), some wondered whether the deal would see the group scale down its investment in the UK.

However, speaking to IBTimes UK, Amplify Snack Brands President International, and former Tyrrells chief executive, David Milner quashed any fears over the future of the Herefordshire-based company.

"UK businesses are often bought by US companies that already have a presence in the British market, but this deal is completely different," he says.

"There are no synergies in place and nobody within our company is concerned by the acquisition. In fact, if I could have picked the perfect scenario then this would have most definitely been it."

The deal, signed in August, is the second major landmark in less than five years for Tyrrells, which was bought by Investcorp for £100m in 2013 and has seen sales and earnings more than double since, while employee numbers have increased by more than 70% globally.

In 2010, 400 jobs were lost after Kraft closed Cadbury's factory in Somerset following its hostile takeover of the chocolate producer, but Milner is confident that Tyrrells is heading in the opposite direction.

"Approximately 30% of the new positions are created in the UK and we plan to continue our expansion in Britain," he says.

Recent forecasts show investment among UK firms could be reined in next year as businesses grow increasingly jittery over the outcome of the Brexit negotiations, while the prospect of rising inflation is a very real threat.

Last month, Walkers, Britain's largest crisp-producer, began negotiations with supermarkets to hike the price of its products between 5% and 10% in response to the pound's sharp depreciation in the wake of the EU referendum.

While acknowledging the impact of a weak sterling, Milner is eager to point out some businesses are better positioned than others to cope with the fallout.

"Input costs have gone up and will have to be passed on," he explains.

"However, the impact that inflation and the weak pound will have on a company depends on where the business sources its material from. Luckily for us, most of our materials are local."

If Brexit can pose hurdles along the way, then the challenge of an ever-evolving market cannot be underestimated either. As of a year ago, the overall value of the UK crisps market had dropped by almost 2% over the past 12 months to just over £923m, but Britain's love for potato chips remains strong. The increasing number of health-conscious consumers, however, means snack-food producers have had to look elsewhere to avoid being left behind.

The agreement with Amplify would deliver a considerable boost to Tyrrells, given the deal will see its crisps being sold across the pond, while it would distribute the US company's SkinnyPop brand in the UK.

According to research from marketing data firm IRI, over the last 12 months sale of the product grew 35.3% in the US to more than $203m. The world's largest economy is also the biggest market in the world when it comes to snack foods.

"Popcorn is one of the most exciting things to have happened to the snack-foods market over the last few years," Milner explains.

"It is perfect for people who want to snack but, at the same time, are conscious of what they eat, which is why we have expanded our offering to include organic and gluten-free options. It might come as a surprise to some in the UK, but the US' snack-food market is a lot more developed than Britains."

Tyrrells' international markets now account for almost 40% of revenues, compared with 20% three years ago, and the company has expanded in Germany and Australia over the last year. In 2015, the British group acquired Yarra Valley Snack Foods just 15 months after launching in the country, and now produces crisps for the whole of its Asia Pacific market in Australia.

Similarly, crisps for Tyrrells' European markets are produced in Germany, which frees up capacity in the UK, addressing one of the group's long-running issues.

Confident that the increased capacity would play a pivotal role in the company's future, Milner is clearly relishing future opportunities.

"We wanted to be bought for what we are and what we stand for as a company, rather than for being just a brand," he says. "That is why we are looking forward to the next step."