Mackie's Of Scotland — case study
@ The following case study has been approved by Mackie's of Scotland.
History
Mackie's Of Scotland has been farming in the North East of Scotland for four generations.
The family-owned company has Maitland (Mac) Mackie as Managing Director and his sisters, Karin as Marketing Director and Kirstin as Development Director and all are entrepreneurial innovators.
Doctor Maitland Mackie (1884-1975) started the business, his son diversified from dairy farming into milk retailing, and Mac Mackie's father began making ice cream.
Ice cream
“Mackie's of Scotland' as it is today was born in 1986 when the business changed from traditional farming and milk retail into ice cream production.A small investment in real dairy ice cream manufacturing used cream surpluses arising from the
increased demand for semi-skimmed milk. The shift to year-round ice cream
consumption stimulated sales of high quality premium ice cream and Mackie's sales reaching £2.5 million in 1993. The continued growth in sales is a major achievement as powerful competitors were already well established in the high-quality indulgence ice cream market.
1993 saw farm buildings converted into a modern ice-cream dairy capable of
producing 10 million litres of ice cream each year. Mackie's only make premium
quality ice cream with fresh milk and cream, the most popular product in the Mackie's range is "Traditional', a smooth creamy ice cream with no added flavours. In 1994 the decision was taken to sell the milk retail business and concentrate on producing
luxury real dairy ice cream.
The years since have been busy with the development of many new high quality premium products. The "Highland range' of ice cream was launched with flavours including Drambuie, Toffee Fudge and Vanilla. A state-of-the-art New Product
Development Kitchen was created (see Appendix A), where innovative products with distinctive Scottish characteristics were created. Developments included Ice Cream Truffles and the launch of “Mackie's with More' ice cream dual brand range products, Walker's Ginger Chocolate and Baxter's Vintage Marmalade flavours. (Walker's and Baxter's are iconic Scottish food brands). A soft scoop ice cream for children, with sorbet products were launched in 2001, and other new products/flavours being
regularly launched. The company have launched over 200 new products with limited edition seasonal flavours proving popular.
Mackie's have their own herd of over 300 Holstiens, a popular milking breed of cow who produce the fresh whole milk used to make the ice cream. Mackie's describe the 'dairy difference' between this fresh dairy ingredient in comparison to other ice
creams made with other fats from vegetable oil. The process from milking to ice
cream can be completed in less than 24 hours.
In 2002 a family-owned Korean company contacted Mackie's leading to creation of some 'Mackie's of Scotland' branded ice cream parlours in Seoul, South Korea.
Organic produce is popular in Korea and Mackie's products were enthusiastically received in product tests. The first temperature-controlled shipments by sea arrived to coincide with the Korean World Cup Games in 2002.
The partnership ended and Mackie's now sells their products, all branded as
Mackie's of Scotland, direct to wholesalers and supermarket chains, providing
opportunities throughout Asia. Sales are now well established in Korea, Malaysia, Taiwan, China and Mackie's had export sales of almost £2m in 2019.
Mackie's prides itself on its new product innovation and in 2004 launched Mackie's
Ice Cubes using the farm's spring water. Initially called lcy Glen they were
subsequently rebranded as Mackice. Other innovations include a Low Fat Chocolate Iced Desert suitable for diabetics and an Indulgent' range with new flavours being regularly added including Salted Caramel and Madagascan Vanilla. Demand was stimulated by carefully crafted advertising such as the 2012‘Simply Creamy"
campaign, as well as using targeted price promotions.
Production capacity was expanded to 15 million litres a year and 2018 saw demand reach 11 million litres. Mackie's became the number one take home ice cream brand in Scotland being available nationally in multiples such as Tesco, Asda, and Ocado as well as through independent outlets. Ocado is a major British online supermarket and online sales have been growing rapidly. In the year to May 2019 annual turnover rose to £16.7million with pre-tax profits at £2.18 million (see Appendix B).
The firm developed strong links with their consumers and been quick to adopt social
media platforms as a means of interacting with and informing its customers. The
company website is fun and informative and seeks customer views through the “Have your say' page. Consumers are regularly involved in testing products and voting for new flavours and chose Indulgent Chocolate Orange as a limited-edition flavour ice cream. Product testing at the Royal Highland Show, and a consumer poll with the
"Friends of Mackie's' email club (see Appendix C), saw Caramel Biscotti became a limited-edition flavour. Mango and Passionfruit flavour was added in 2018 as part of the 'Celebrate the summer' campaign.
Mackie's regularly uses fun in its communications and the "Extra Posh' product range
tubs pictured cows wearing tiaras (jewelled crowns). For the 30h anniversary of making ice cream, special anniversary tubs were produced.
In 2017 the lce Cream Parlour, 'Mackie's 19.2 opened in Aberdeen. 19.2 represents the number of miles from the farm to the parlour which is 'Sophistication dipped in fun'. The interior contains an illuminated multi-coloured cow and neon lit Italian ice cream counter. The parlour showcases, tests and gathers feedback on new
handmade ice cream flavours and other innovative products.
In 2009 Mackie's launched a range of potato crisps after establishing a joint venture
company with the 4h generation Taylor family who owned the Taypack potato growing and processing company.
Mackie's at Taypack is licensed to use the Mackie's of Scotland brand name and has
its own distinct website. The slogan ‘From plough to pack' emphasises product
quality through the stages of Ploughed, Picked, Perfected and Packed. Traditional crisps with three core fiavours were launched, alongside new flavours with a unique Scottish identity — like Haggis and Cracked black pepper. Products are sold through major Scottish outlets and the company regularly attends trade fairs. There is a strong focus on new products such as ridge cut crisps, lentil waves and popcorn.In 2010 the firm received the Scotland Food & Drink Excellence Award, with Scotch Bonnet Chilli Pepper potato crisps winning Product of the Year. Second and third Excellence awards were subsequently gained along with a Great Taste Gold Award.Growth in international sales and expanded sales through Asda stores in England and Northern lreland led to a move to a larger factory. 2015 saw the firm listed in a government initiative as one of the UK's '50 Food Stars'. Sales continued to grow domestically and internationally with rapid expansion in China, moves into Europe the UAE and Asia, and by 2017 the firm exported to 25 countries. That year they secured the Export Business of the Year prize and the International Growth Award delivered in partnership by private sector group Opportunity North East (ONE) and Aberdeenshire Council. Later that year the firm's products gained an important
listing with Ocado.
Chocolate
In 2014 Mackie's launched a range of chocolate bars with four flavours similar to
some of the ice creams, including honeycomb, dark mint, traditional milk and dark 70%
cocoa. Initially production was trialled with an established producer in Arbroath before establishing their own farm based factory capable of producing five million bars per year.
Mackie's is well established in serving the growing indulgence product segments and high quality chocolate fits well with their quality ice cream and crisps. Exports have been helped by working with an established food distributor in Singapore and sales of chocolate grew by 63% in the year to May 2019, with exports a key driver in that growth.
Ethical production
The Mackie's family is very proud of their environmental credentials in farming the land and producing the freshest high quality products.
The company vision is to 'be a Scottish global brand from the greenest company in Britain created by people having fun'.
They aim to be self-sufficient in energy with zero fossil fuel use, and in 2005 installed a wind turbine with a further three producing some 3MW. Solar panels installed on buildings and a 4 hectare site of panels installed in 2015 produce 1.8MW. The family established a Scholarship for Renewable Energy at Aberdeen University. delivered guest lectures at Abertay University and has offered work placements for students.An innovative refrigeration system, to be an exemplar low carbon refrigeration system began installation in 2020, replacing all old refrigerants with ammonia (a natural gas, with zero climate warming potential), powered by the energy efficient biomass boiler and absorption chiller — and on completion this wil help Mackie's in their aim to be self-sufficient, as it will reduce CO2 emissions and energy use by up to 80%.A
biomass boiler also heats the office and farm buildings and solar panels are on roofs of the byre.
Mackie's arboretum contains 112 different tree species, providing a beautiful space
that can be enjoyed by visitors and staff. A further 48 hectares were planted to provide habitats for wildlife, and grass strips sown around fields to create wildlife corridors and help protect waterways from fertiliser. Wetland areas and a pond
encourage a diverse wildlife population. Mackie's has its own water source and all
water used is recycled and reused on the land along with the plentiful fertilizer produced by the cows.
In 2010 Mackie's started making their own ice cream tubs saving some 50, 000 food miles per year as the tubs were previously imported. The firm actively encourages the recycling of its tubs and recycles card, paper, batteries and plastic at the farm.Cow welfare is very important, and happy cows produce more milk. The cows are milked by a voluntary access milking system - milking themselves on average three times a day. Each cow wears a collar which also measures the cows activity levels.The cows are housed with its own lying space complete with mattress, and feed is available at all times with fresh food added twice per day. A vet visits every week and an innovative 'Moo-sic' (music) experiment saw country music played to the cows resulting in a positive impact on the animals' behaviour.
Participation in the TV 'Eat Well for Less' series allowed Mackie's to highlight the qualities of real dairy ice cream that led to their highly successful “Taste the Dairy Difference' brand message.
The people
Mackie's employs over 70 staff and the company vision recognises the contribution
of its loyal, flexible and energetic workforce. The company signed up to pay the “Living Wage' in 2015 and also the'Scottish Business Pledqge'. The Living Wage is set at a higher rate than the legally set minimum wage. The Scottish Business
Pledge is a values-led partnership between Government and business that is based
on boosting productivity and competitiveness through fairness, equality and
sustainable employment. Mackie's places staff training. youth development, family friendly shift patterns and reward programmes at the core of the business.
Mackie's was one of the first food companies in Scotland to be awarded Investors in People status in 1997.This marked a big change in Management style from a 'dae fit yer telt' culture (do as you are told), to one of continuous involvement of all staff in setting and achieving goals. Mackie's remains a family firm and regular consultation and discussions with employees are an essential means of maintaining its inclusive and fun company culture where all employees are valued as part of the wider
“Mackie's family'.
Employees commonly stay for many years and Mackie's celebrates their
achievements and runs a business performance related bonus scheme. Making work
fun and having happy staff is a core value and their 'Faces of Mackie's' campaign was an example which showcases employees in their roles through photographs.
Appendix A
New product development kitchen and the taste panel
The New Product Development Kitchen, officially opened in October 1996 by the Chairman of Tesco. provides ideas for the Growth programme and is a crucial resource, which enables the firm to maintain the quality of the ice cream and
chocolate. The work of the kitchen is both technical and creative and plays a crucial role in looking for new products and flavours that fit Mackie's Values.
The kitchen is equipped with mini plant for ice cream production which replicates the ice cream dairy. The Kitchen is sufficiently large enough to be used as a production area to test out new products. The aim is to find at least one great new product each year as well as undertaking “Blue sky' thinking regarding new products to expand the current product mix. Recently the company has established links with Abertay
University Innovation Centre to help further develop the capacity to produce successful new products.
In 2013 Mackie's created its Sweetie (sweet) Kitchen to help produce its own
Honeycomb (puff candy) that is used in its second most popular ice cream flavour一and they now make over 60 tonnes a year. The Sweetie Kitchen also produces its own Butterscotch as well as experimenting with other sweet treats that can
potentially be used in its ice cream and chocolate products.
Mackie's have a taste panel that meets at least once a week in the New Product
Development Kitchen and undertakes an important role in developing new products
and maintaining quality. Members of the Panel are staff volunteers selected by
passing tests, which require a high sensitivity for flavours and aromas. Products with
potential are then tested by food services customers and panels with a wider membership.
Mackie's also uses informal taste Panels - groups of staff volunteers who may not have passed the taste tests or not completed their training but whose opinions are still highly valued.
AppendixB- Mackie's of Scotland-Income statement Profit and loss account-forthe period to 31# May
Tumover
Cost ofsales
Gross proft
Dstrbution costs
Administraive expenses
Other operating income
Profit on sale of tangble assets
Reversal ofexcepfional bad debt
provision
Loss on disposal of investments
Operating proft
Interest receivable and similar income
Interest payable and similar expenses
Fairvalue movement on investments
Profit before taxation
Tax on profit
Proft forfinancial year
10,284.432 11, 147, 549 11 433 324 12, 155, 090 12.217,.787 13, 854, 382 16.665.316(5, 961, 79) (6, 820, 82) (6, 828, 565) (6.479, 834) (6.74 884) (8,233,223) (9, 976, 945)4, 32 633 4 326, 667 4, 604, 759 5, 675, 256 5, 472,903 5, 621, 159 6, 688, 371
(397, 739) (442.030) (47.034) (493149) (474275) (53, 994) (696, 564)
(3, 828, 790) (3, 204, 297) (3,400 958) (3, 998, 759) (3, 969, 848) (3, 949, 956) (4, 151, 286)
148.657 142.405
133, 78 59, 173 250, 185 27,587 146.000 242.288
573. 328
400. 000
377.939
(33, 377)
250, 183
594.745
(47, 944)
546. 801
881.918
(14,000)
1, 791, 874
1,494, 004
1,100.227
1, 327, 434
(3, 029)
2,120.259
65,144
(8.852)
(22, 39) (23, 90)
(2.815)
860,566 1,820, 832 1487.756 1, 155, 399 1.376, 587 2, 176 233
(58, 197) (313, 244) (283, 817) (118. 018) (280, 160) (450, 649)
802.369 1,507, 588 1203.939 1037, 381 1096 425 1725.584
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(19, 968)
(98,920)
Mackie's of Scotland -Statement of financial posilionlBalance sheet- as at 31* May
Non-current Assets
Tangile assets
Investment properties
Imvestments
Biological assels
8.253.985
21.444
53100
8.979,815
10.394.881
141,286
96, 944
580 370
11, 168, 481
10.431.230
1528.917
93.811
606.944
12, 660, 02
Current Assets
Inventories
Biological assels
Trade Receivables
Cash at bank and in hand
Trade Pavables
Net assets
Total assets less current
liabilities
1.276.820
318, 369
3.822, 463
664.559
6,082211
(3, 356, 00)
2725 311
11, 705, 126
2, 062, 631
168. 026
3, 138 231
5, 372, 109
(2, 66, 155)
2,705, 954
13, 874,435
1, 835, 799
235. 924
3.84. 34
822.812
6 738, 879
12, 983, 076)
3.755,803
16, 416, 705
Non-Curent Liabities
Provisions for liabifties
Net assets
(584, 382)(395, 048)10.725.696
(571, 24)(365, 795)12.937.016
(173, 489)(496,191)15.747.025
Capital and reserves
Called up share capial
Share premium aooount
Capital redemption reserve
Retained Eamingp
Total equity
262.288
3 869.252
315, 065
6279.091
10.725.696
262.288
3, 69.252
315, 065
262.288
3,869. 252
315.065
8490411 11300.420
12.937.016 15.747.025
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Appendix C
Friends of Mackie's and the public
Mackie's believes in celebrating the simple things in life and that its products are delicious, simple treats that can be enjoyed by all ages. The company believes in having fun whilst making ice cream and also wants the general public to have fun.The 'Friends of Mackie's' email club encourages the public to have their say about Mackie's products and anything else the firm does to make improvements. The club allows the company to keep members informed about new products, farm activity and other company developments. Members receive exclusive offers and surprises along the way including taste test opportunities and dream flavours of ice cream and chocolate gifts for a lucky selection of fully registered friends each month.Mackie's places great importance on its communications with the public, and as in everything it does it aims for the 50, 000 members of the Friends of Mackie's'to have an interesting and enjoyable experience.
Mackie's holds reqular promotional events, an example being the'Summer of
Simple Pleasures campaign that anyone can enter through the company website.There is a new prize each week, each with a link to the simple things in life, from cooking, eating, music, flowers and the outdoors. Mackie's views ice cream as one of life's simple pleasures and each prize comes with a summer's worth of ice cream with the final week of the summer offering a lifetime supply of ice cream for the
lucky winner.
Mackie's welcomes public comment and interaction through its website and several
social media platforms, inviting comment, ideas, product reviews and likes and
dislikes. The company places customers, the wider public and employees as being at the centre of everything they do.                                      4. To set up an inclusive and fun company culture where all employees are valued as part of the wider ‘Mackie’s family’, Mackie’s places a strong emphasis on the engagement with their workforce. Analysis how this engagement may have contributed to the success of the company.