Export story: Fracino
How exporting helped Fracino grow during a recession
Award-winning coffee machine manufacturer Fracino managed to turn the credit crunch to its advantage. The company’s head of sales and marketing, John Cook, explains how looking beyond the UK has helped.
We are, famously, a nation of tea drinkers. But these days, many of us are just as likely to be clutching a plastic cup of cappuccino, latte or espresso than indulging in a good old cuppa. And gone are the days when an anaemic cup of instant coffee will suffice. Fracino, which manufactures coffee machines, has capitalised on the changing tastes of its domestic market, and is now looking beyond the UK for growth opportunities.
The business was launched in 1964 by Frank Maxwell, who was inspired by a coffee machine bought on a family holiday in Italy. He began by selling machines to retail outlets in Britain, and started trading under the name Fracino in 1990. However, it’s during the last three years that the business’ export sales have really grown, explains head of sales and marketing John Cook, as the recession forced the company to look at new ways to increase revenue. Whereas the UK market used to provide around 95% of Fracino’s business, export revenue has now risen to 25% and is expected to increase in 2011.
“Our export strategy came about because of the credit crunch and the fall in value of the pound,” explains Cook. “Three years ago, exports provided profits of just £50,000 a year and 95% of that was to southern Ireland, so it was virtually non-existent.
“Then we saw the credit crunch coming and did two things,” he continues. “First we introduced some economy models for the home market, as we realised people would be wanting less expensive coffee machines. Second, we investigated exporting our machines across the world. We looked at the Italians and Spanish, the prime coffee machine makers, and thought: ‘Let’s see what we can do.'”
Today, Fracino exports to 25 countries, mainly in the Far East, Australia and Russia. “The only place we don’t export much to is the Americas,” explains Cook, “primarily because they insist on certain specifications being met beforehand.
“We’re going through the process of getting the accreditation, but it is quite time consuming and expensive.
“We conducted the process primarily through the internet to find potential retailers overseas,” says Cook. “We looked mainly for coffee companies that were just starting up, so very keen and eager to expand their business.”
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This growth strategy is paying off for Fracino. “By choosing newer companies, you are not just going to become another name on their list. With them the potential is much greater.”
The physical transfer of goods is done by air or sea depending on what the dealers prefer. “We use four or five businesses to get the best quotes as companies tend to specialise in different places in the world,” explains Cook.
The Birmingham-based manufacturer has been a consistent award winner, with achievements including a Millennium Product Award for design, recognition as one of the UK’s fastest growing inner city enterprises and the first business of its kind to gain the ISO 9002 quality standard. The company, which turned over £2.4m last year, has projected a minimum of £2.8m for 2011. This should also increase year-on-year, according to the company, as exports continue to grow.
Fracino has formed several exclusive partnerships in Asian and European countries. “What we look at is giving people exclusivity on the basis that they will buy a certain number of machines from us over a period of a year,” explains Cook.
“We have looked at taking advantage of the British embassy and trade missions, and I was intending to use one to the Middle East, but it was cancelled at the last minute. “I think there is benefit in looking at the various locations. We’ve just tracked down a deal in China and there will be a trade mission there this year.”
With a goal of increasing trade outside the UK in 2011, and with an eye on the leading developing economies, Fracino looks set to overcome logistical challenges and achieve healthy growth in the market-leading nations of tomorrow.