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OCTOBER 25, 2004
Bakkavör Group Iceland. Rank: 3. Sales: €207.4 million Britain's cash-rich, time-strapped consumers have worked wonders for convenience-food manufacturer Bakkavör Group. That's because extended working hours and the longest commuting times in Europe are pushing heat-and-serve meal sales in Britain up 8% each year, faster than any other food sector in the country. Two Icelandic brothers, Agust and Lydur Gudmundsson, founded Bakkavör in 1986, when they were just 22 and 19. Initially, Bakkavör focused on supplying raw fish to retailers in Iceland but quickly moved into making processed consumer meals for European stores. It sold off its fisheries in 2003, when that business proved less profitable than its processed-foods line. Today, all of Bakkavör's operations are based in Britain. The company mostly sells chilled, ready-to-eat meals, side dishes, sauces, and dips under the in-store brand names of British supermarket chains. A RISING STAR. Publicly listed Bakkavör's star was already rising in 2001 when it bought competitor Katsouris Fresh Foods for €148 million. Since then, the share price has soared 500%, as have its top line and head count. In 2003, Bakkavör posted sales of €207.4 million and net profits of €15.1 million, a two-year leap of 300%. It currently employs 2,050 people, up from 220 in 2000. Bakkavör's fortunes are linked to British supermarket leader Tesco, which it started to supply in 2001 and through which it now generates almost two-thirds of its sales. In 1995, Tesco overtook J Sainsbury as the No. 1 supermarket chain in Britain and hasn't shown any signs of flagging yet. In September, Tesco announced British sales for the first half of 2004, up 11.5%, to €19 billion. "Their relationship with Tesco is one of their main strengths," says Sigthor Jonsson, analyst for Reykjavik-based Kaupthing Bank. HUNGRY TO EXPAND. Chairman Agust and CEO Lydur may not be fans of the public eye -- they declined an interview with BusinessWeek -- but they're quietly staking a large claim on the British convenience-food market. In June, 2004, Bakkavör upped its stake in Geest, Britain's second-largest maker of fresh convenience food, to 20.03%. Whispers of a takeover at the time were quashed by Agust, but Bakkavör hasn't ruled out increasing its stake in the future. Customer appetites are still strong for Bakkavör's food. Mid-year 2004 sales were up 17%, spurred by the development and launch of 80 new convenience-food products. Kaupthing Bank forecasts full-year sales growth of 12% and profit increase of 30%. That should keep Bakkavör's cooks busy for a long time. 
BW MALL
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