Baker of the ‘people’s bread’

Warburtons’ sliced loaf is the “Volkswagen of the bread industry”. So says Jonathan Warburton, chairman of Britain’s biggest baker. Which, he adds, with typical immodesty, “is a huge compliment to VW”, before congratulating himself on the “very good analogy”.

There is nothing understated about Mr Warburton. Mischievous, plain-talking and loud, he retains his Lancashire accent despite being privately educated at Millfield, a boarding school in south-west England.

If there is one thing that is undeniable it is that the 54-year-old is “obviously a bleeding fan of bread”. And bleeding obvious it is. He even takes boxes of his loaves to his holiday home in Cornwall.

That is not to say he never indulges in a spot of artisanal bread – every Friday, his wife Kim buys a sourdough loaf from the local farm shop and the family “chomp through it”.

Despite his occasional forays into upmarket breads, he sees himself as a champion of the man in the street’s taste. The comparison to VW serves to show his sliced loaves wrapped in wax paper are the “people’s bread”. “It’s the classic, everyday product . . . We are mass market and very proud of that.”

Family is at the heart of the privately owned company, which is run by Mr Warburton and his cousins, Ross and Brett – the fifth generation to do so after it was founded in 1876 by Thomas Warburton in Bolton, where the headquarters remain today.

On a drizzly, murky day, the red-brick buildings (an office and a bakery), which are located in a big carpark, look rather bleak. In Mr Warburton’s office, a photograph of his four children hangs over his desk.

Born: June 6 1957

Education: 1971-1976 Millfield Senior School

Career: 1979-1980 Sales rep, Unilever

1980 National account manager, Warburtons

1984 Sales director

1986 Marketing director

1991 Joint managing director

2001 Chairman

Hobbies: skiing, golf and his family

All other pictures are black and white prints of the 1928 Olympics ski runs: “There’s no real significance to them,” he says, aside from the sport being a passion. “They’re not shots of bread, which you might have expected,” he adds. There is, however, a small orange model van with Warburtons painted on its side.

In 1991, he and his cousins inherited the business on the same day that his father and three other family members resigned. If that sounds dramatic, it wasn’t quite an overnight takeover. The managing director, finance director and personnel director were all non-family and held the young Warburtons’ hands over a five-year period. “We were allowed to have an influence without being given the family silver to bet away,” Mr Warburton explains.

The business they took over was, he adds, “a ragbag and bobtail”. His father’s generation had diversified into jewellers, a fish farm and a share in a health club in Boston, Massachusetts. There was some sense to the profitable yet sprawling portfolio – the fish farm, for example, was bought because fish eat stale bread. “They didn’t bloody eat ours,” he quips.

The new generation decided to refocus on the bakeries and expand that business. “The trick is either continuing to suck on the silver spoon or to turn it into a full set of cutlery,” he says, using a metaphor he has, he concedes, tried before.

As supermarkets undercut each other on price, the pressure on suppliers such as Warburtons is intense. “The [retailers] are all scrapping like mad; there’s a death march going on . . . a race to the bottom. That affects you,” he says.

Their margins have also been under pressure due to wheat inflation. Revenues for the last recorded financial year (to September 2010) fell from £510.4m to £492m and profits were down from £33.9m to £28.8m. “In the past two or three years it’s been brutal,” he admits. “We’ve absorbed an awful lot of costs and we’ve had to pass some on because otherwise we’d have made no money . . . There isn’t any sign of the tunnel yet, let alone whether there’s a light on.”

This year, for example, the company has installed bakeries in eastern Europe, making bread for Tesco, which was dissatisfied with the quality of the loaves it had been receiving. Mr Warburton has tried not to get involved in the move. “When you’ve had 50-odd years in this business, which I have, you have a lifetime of prejudice which has built up inside you. I can hear my father – bless him, God rest his soul – coming out in me saying: ‘Well, that won’t work.’ So I’m bright enough to think I probably better leave well alone.”

Having enjoyed himself rather too much at school, Mr Warburton failed to make the grades to get into university. So, he “buggered about” for a couple of years before joining Unilever, the consumer goods company, as a sales rep. “I lived in hotels for 12 months, all over the UK, week upon week,” he says, describing it as a “sobering experience”.

Still, it provided the type of business education that university never could. “It made me very independent, because you’ve got a car, a box of contacts, and you’ve got to go out and flog stuff. You either collapse in a heap or you [get on with it]. I don’t think I was particularly good at it but I didn’t collapse in a heap.”

At 23, he joined the family firm as a national account manager. In practical terms, this meant he would go to small, regional supermarkets to make sure their bread had arrived.

It was then that he realised his bread could be priced at a premium to its competitors. They tested it in a local shop. The number of sales went up.

“The premium made people stand back and judge it differently [to] the two [brands] that were alongside it. If we aren’t worth [it] they wouldn’t buy us again.” It is a philosophy they have adopted ever since.

Conceding it is a “dull, grinding industry”, Mr Warburton is nonetheless proud his business makes things rather than being “bankers buying fleets of Ferraris”. He wishes manufacturing got a better press but with the continued vilification of the banks, he hopes this will be his “day in the sun”.

The City fills Mr Warburton with horror and bewilderment, which makes him reluctant to take the company public. “I wouldn’t be able to take [investment bankers and analysts] seriously . . . because they wouldn’t know what they were talking about . . . It’s incredibly easy to be critical about something that you don’t truly, truly understand.”

Would he sell? “We never get approaches because I think it would be a waste of people’s time,” he claims. “It’s not like we’ve trailed our coat around [and] pursed our lips at any suit . . . [but] we’re not weird about it. My dad always used to say to me: ‘Look, if somebody came along and offered you [a good price], you’ve got to consider it.’ ”

A year ago, Mr Warburton and his cousins also started planning their succession, setting up a programme for their offspring over the age of 18 to work a minimum of eight weeks, paid by their parents rather than out of the company coffers, over a four-year period. This would enable the management team to see which child was best suited to the company.

Does he think one of his might take over?

“I’ve got four, so I’m working on the principle that one of them will rise to the top,” he says.

Which one?

“I couldn’t bloody tell.”