Adam Sopher, Joe & Seph’s Co-founder and Director, has fond memories of his dad, Joseph, returning from business trips to the US armed with bags of popcorn. When Joseph retired, the pair joined forces and, following a few false starts in the family kitchen, decided to turn the passion for popcorn into a business concept.
Sopher says: “In 2010 we decided to trial six flavours at a food show, not thinking that anything would come from it.” The popcorn was such a hit that it sold out in two days. Fast forward four months and the product launched in Selfridges, and Joe & Seph’s was born.
Today the company stocks a mouthwatering array of 80 flavours – from bestseller salted caramel to more elaborate lines including goat’s cheese and black pepper, even gin and tonic – all made using natural ingredients and now available through an enviable list of high-end retail outlets.
Sopher admits that the initial foray into export came about by chance after the buyer for a Parisian department store saw the Joe & Seph’s display in Selfridges. That chance enquiry just six months after its UK launch has since morphed into an export operation spanning 19 countries and generating around 30% of turnover. The US, China and Scandinavia represent the company’s biggest export markets.
“At that time, a lot of people were saying, ‘don’t do exporting because you’ve got to get your UK business sorted first’, but the UK popcorn market wasn’t big enough in 2010 and the UK wasn’t ready for a premium popcorn,” Sopher says.
The Department for International Trade has been instrumental in the export journey, Sopher says. And even today the company says advice and support from its international trade advisor since around 2012 has oiled the cogs. “Our adviser puts us in touch with the right people around the world. And when we go to a different market, we make sure we meet up with the local DIT person.”
Servicing a range of channels – including cinemas, premium retail, supermarkets, hotels and restaurants – means that Joe & Seph’s uses a combination of direct selling to retailers and distributors, managed by a small, UK-based team to navigate the regulatory aspects of the food sector around the world.
Navigating the different statutory labelling requirements around the world can be complex, “but all of those things are pretty surmountable,” Sopher says. “When something changes, DIT is pretty helpful, but ultimately your customer wants you to be successful in getting the goods to them and they’ll know their local market better than us. We tend to ask for a checklist of what they need.”
Sopher says the handmade in Great Britain badge certainly gives the products extra kudos in overseas market, particularly the US and Asia. “There is a lot of perceived value in that. Britain is very cool, trendy and renowned for its quality of products.”
Although the foray into overseas markets was almost accidental, it served the company well from a cashflow perspective. “Our first two years of exporting basically paid for our growth in the UK and because for those two years, all of our export was done on pro forma terms,” Sopher explains.
Today, cashflow remains the biggest export preoccupation for Finance Director Isaac Parnell. “To make it worthwhile, we need to build containers worth of stock. Depending on the agreement, often that doesn’t get paid until it arrives in the US or in China and an extra 60/75 days after that. So we’re looking at a working capital hole of anything up to 120 days, which for a small business like ours is huge. That’s my big thing that keeps me up at night,” Parnell says.
ACA-qualified Parnell is keen to explore the Export Finance Scheme provided by UK Export Finance (UKEF). It provides partial guarantees covering up to 80% of the risk to lenders to cover the credit risks associated with export working capital facilities both pre- and post-shipment. “Other than that, we will look for invoice discounting facilities to remove that big lag from leaving us to getting paid.”
Meanwhile, current exchange rate volatility is a double-edged sword; the strength of the USD is benefitting exports, although the price of raw kernels imported from the US has gone up. It can also make it tricky to get a sensible understanding of operational ratios, Parnell says.
In 2020, the company was recognised with a prestigious Queen’s Award for Enterprise for excellence in international trade, having tripled its overseas sales in just three years. But the company is certainly not resting on its laurels, with a range of chocolate truffles just launched and further plans for growth overseas on the agenda.
Joe & Sephs has just launched with QVC USA, and the first airing resulted in the product selling out during the show. “The focus is on trying to consolidate in those regions that we’re in at the moment,” Parnell says.
Similarly, he is optimistic that a rebound of air travel will also boost revenues. “Travel used to be a large part of our turnover, and it’s currently at less than 2%, so that’s going to be a big focus of our efforts over the next year.”
Reflecting on the journey to date, Sopher says he has only one regret: “I wish when we first started the business that I really understood that there are markets outside the UK that could be bigger than the UK for us, because we probably would have structured our business quite differently if we were aware that export could be such a focus.”
ICAEW is working with DIT to promote the export services available to businesses. Find out more about our services – Department for International Trade – GOV.UK (www.gov.uk)
Discover more from ICAEW Insights
Insights showcases news, opinion, analysis, interviews and features on the profession with a focus on the key issues affecting accountancy and the world of business.
Hear a panel of guests dissect the latest headlines and provide expert analysis on the top stories from across the world of business, finance and accountancy.Find out more
News in brief
Read ICAEW's daily summary of accountancy news from across the mainstream media and broader financing sector.See more
Stay up to date
You can receive email update from ICAEW insights either daily, weekly or monthly, subscribe to whichever works for you.Sign up