The structure of a large part of the flour milling industry in the United Kingdom is currently going through a period of rapid change. Apart from the market leader, Allied Mills, which remains part of Associated British Foods, ownership of the other two leading flour producers has changed or is about to change.
In the break-up of Dalgety, Spillers Milling was sold to the Irish group, Kerry Foods, in 1998. Kerry, in turn, sold six of the eight Spillers mills to Tomkins, the parent company of Rank Hovis. That move was reversed by the U.K.'s Monopolies and Mergers Commission, which recommended that Tomkins sell four of the six Spillers mills.
These were sold in April 1999 to Archer Daniels Midland Co. of Decatur, Illinois, U.S. At the end of 1999, Tomkins announced that it had decided to sell off its food interests, including Rank Hovis McDougall and bids were invited in early 2000.
Outside the multinationals, however, is a small group of independent companies, some still family owned and managed, which have survived by concentrating on supplying specific markets and maintaining customer loyalty. One of these is the Stockport-based William Nelstrop & Co. Ltd., the fourth-largest of the group of independent millers which still accounts for just over 20% of the U.K. market.
Now the only independent, family-controlled mill in the northwest of England and Scotland, the company was founded in 1820 by 19-year-old William Nelstrop, who set up a corn dealing business on Lancashire Hill, where the Nelstrop mill stands today. The site's association with milling goes back even further. When excavations were being carried out recently for a new office complex, a large millstone was unearthed — evidence of a windmill that had stood on the site for centuries.
William Nelstrop moved into the steam-powered Albion Mills on Lancashire Hill a year after it was built. He became an important local figure, served as mayor of Stockport and was offered a knighthood by Queen Victoria for his part in defusing the anti-Corn Law riots in the 1840s. Nelstrop refused the honor, partly because he had some sympathy with the poor who were starving because they could not afford to buy bread and partly because lower wheat prices would benefit his own business.
William Nelstrop died in 1877. Through an unbroken line of family control, the business is now run by fifth-generation Conrad Nelstrop, chairman and joint managing director, with his late cousin, Paul Nelstrop, who also was company secretary (see story on Page 12). Conrad Nelstrop's nephew, Conrad Syers, the first of the sixth generation, is technical director and has recently been joined by the chairman's son, Matthew, who has started work in the sales department.
QUIET STABILITY. Despite its air of quiet stability, Nelstrops has had its share of problems and crises. The original mill was destroyed by fire in 1893, but rebuilding provided the opportunity to replace all but one of the stone grinding mills with the new Henry Simon steel roller mills. During World War II, all the central Manchester flour mills were destroyed in air raids. The remaining family mills in the suburbs stepped up production to meet the urgent demand for flour. Nelstrops introduced three-shift work schedules while family members and staff stood by with sand buckets on the roof to douse incendiary bombs.
The mill escaped damage but, having survived the war, Nelstrops faced a difficult time in the 1950s and 60s as the industry began a period of restructuring and consolidation when many family businesses were taken over by the national millers. Nelstrops, however, resolutely retained its independence, and in the next decades began to see new opportunities as customers started to tire of the mass-produced, sliced white bread, and began to look for new tastes and textures.
One of the keys to Nelstrops' survival, said Conrad Nelstrop, has been its ability to watch the market and anticipate changing trends.
Nelstrops also has maintained a policy of working closely with milling machinery manufacturers — made easier by the close proximity to the former Henry Simon Ltd., now Satake Corporation, U.K. Division. All of the company's directors have spent time training with Henry Simon or Satake and gained experience working in the milling industry around the world. This meant they were able to keep up with technical improvements and has led to the installation of a U.S.$3.2-million computerized system that controls the entire milling process. This new system carries out continuous, online quality monitoring and full computer process control of wheat conditioning, cleaning and milling.
There are three mills on the site, including a facility for stone grinding. Nelstrop was one of the first mills in the U.K. to install Satake's PeriTec system as a way to increase capacity within the existing mill buildings and provide the flexibility to increase its range of flours.
The PeriTec milling system, developed by the Satake Corp. of Japan, involves debranning the wheat before milling.
After a brief preconditioning, wheat is transferred to the VCW Debranner, which uses both abrasion and friction action to strip off the bran layers. These can be varied according to the type of flour and bran required. The kernels are then passed through a hydrating unit, designed to maximize moisture penetration and give a high level of control of moisture levels in the flour. (A detailed description of the Satake PeriTec system appeared in World Grain, March 1996.)
Conrad Syers, Nelstrop's technical director, said the PeriTec system had created a lot of interest and the technology was working well. It is mainly used for milling hard wheat and is another advance in technology that helps keep the company competitive, he said.
PROACTIVE TO CHANGE. According to Conrad Nelstrop, the company's biggest change over the past 10 years has been the need to create closer working relationships with its customers and to be proactive, rather than reactive, to market changes. New ideas are continually being tried out by bakers in Nelstrops' test bakery.
One example of this was anticipating the increased interest in high-specification wholemeal suitable for soft-sliced pan bread, which started to become popular in the context of healthy eating. Another example is the increasing demand for organic bread, which the company anticipated by making the necessary changes to achieve organic status and accreditation by the Soil Association. Yet another successful development has been Pizza Lily flour, which is now being sold nationally through wholesalers as the market for pizza booms.
"Keeping in close contact with our customers and exchanging ideas we believe breeds some loyalties and commitment on both sides," Conrad Nelstrop said. "It's a question of ‘think customer' all the time."
Wheat is sourced mainly from the U.K., with some coming from Canada, the United States and Continental Europe. Nelstrops produces 50 different types of flour and 120 products. The products are sold through wholesalers as well as going direct to larger customers with bulk deliveries going to the Midlands and Glascow.
Main customers are independent bakers, in-store bakeries, brand names and pre-packed own label. Demand for ethnic products of all kinds is increasing.
There is still room to expand on the existing site, which has steadily been enlarged over the years as adjoining properties became available. Ownership of the site has been an important factor in the company's survival.
"We have concentrated on return on capital," said Paul Nelstrop. "Our ability to retain the original premises has meant that we have not had to spend money on moving to a greenfield site. Estate management is important because it provides money in the bank."
As for the future, Mr. Nelstrop said he believes the industry has moved to an era where anything can happen. Companies and plants are traded with increasing frequency. "Flour mills are now a tradable commodity," he said.