The boss of shortbread-maker Dean’s of Huntly has said the firm is facing spiralling costs as it tries to recoup some of the lost sales it suffered at the height of the Covid-19 pandemic.
Inflationary pressures are pushing up the cost of a raft of overheads, including plastics, packaging materials and haulage – in some cases as much as five-fold, Bill Dean said.
Hopefully, the worst of it is now behind us and we can look ahead to better times.”
Bill Dean, owner and managing director, Dean’s of Huntly
Staff shortages are also making life difficult for food manufacturers, as well as businesses in many other sectors, as Scotland’s economy claws its way back to recovery, he added.
And while he is confident about the long-term prospects for Dean’s, he warned a combination of Covid and Brexit had created new trends that are “starting to impact on “normal business” and hampering the efforts of many companies to get back on track.
US tariffs on a wide range of European Union exports to the US were an impediment for Dean’s last year, he said, adding sales took a huge hit – down nearly 20% year-on-year – as the pandemic ravaged tourism, gifting, other retail and foodservice markets.
Mr Dean – owner and managing director of the 46-year-old family business – was speaking after accounts from Companies House showed pre-tax profits at Dean’s plummeted to just over £81,000 during the 12 months to June 30 2020, from £421,149 the year before.
Turnover slumped to £7.33 million in the latest period, from nearly £9.2m previously.
‘Long, slow burn”
Profits and turnover improved during the year to June 2021 but businesses of all kinds are going to be feeling the impact of Covid for at least another 12 months, Mr Dean said.
He added: “Inflation is having an impact here and now. It’ll probably be into next year before margins begin to recover – it’ll be a long, slow burn.
“Firms just have to be patient – in our case, we’ve been working hard right through the pandemic to develop and innovate new products which should, hopefully, stand us in good stead.”
Dean’s visitor centre and cafe, an important source of income for the food manufacturer, was shut for seven of the past 12 months as Covid-19 rules kept people at home.
Overall, the company is “starting to see business climbing back up” – but not to the levels seen before the pandemic, Mr Dean said, adding: “There is “still a wee bit to go.”
Reflecting on the past 16 months and the many challenges of recovery lying ahead, he said: “The problem is that nobody has had a script for what has unfolded.
“We are fortunate in that we have managed to keep our site going and, hopefully, the worst of it is now behind us and we can look ahead to better times.”
Private label work is keeping Dean’s particularly busy just now as its main markets try to shake off recent woes, with the company hoping to reap the rewards of its efforts during the past 12 months or so, he said.
Any downtime “has not been wasted”, the 56-year-old said, adding: ” We’ve certainly not been twiddling our thumbs.”
Dean’s provides jobs for 135 people but this can rise to around 150 at peak periods, with both these numbers unchanged from before the pandemic. A combination of Covid and Brexit means finding people to fill any vacancies is challenging as “overseas labour is not here this year”, Mr Dean said.
On 2021-22 trading, in a recovery helped by the firm having a “strong cash reserve” at the start of the pandemic. Mr Dean said: “I’m confident we’ll get things back on track.”
It all started in the family kitchen
The managing director’s mother, Helen Dean, launched the business in her kitchen in 1975.
Friends and family loved her homemade shortbread so much that her husband, also called Bill, encouraged her to bake to help raise funds for the local pipe band, for which he was drum major.
The band’s touring ensured the fame of Mrs Dean’s produce spread far and wide, and the family-run enterprise took off from there. Mrs Dean died in 2007, two years after her husband.
I think we can all agree with Leanne and Judy that the best part of making shortbread is, well, eating it! 😍
— Dean's (@DeansShortbread) February 19, 2021
Dean’s own brand and private label products are now sold by retailers throughout the UK, while its shortbread packs can also be found in restaurants and hotels across Britain.
The company exports to around 30 countries around the world, including India, China the US and many mainland European markets.