Booker PLC

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Booker PLC

Portland House
Stag Place
London SW1E 5AY
United Kingdom
(0171) 411 5500
Fax: (0171) 411 5555

Public Company
Incorporated: 1900 as Booker Brothers, McConnell & Co.
Ltd.
Employees: 21,049
Sales: £3.72 billion (US$5.94 billion)
Stock Exchanges: London
SICs: 5140 Groceries & Related Products

Chairman Jonathan Taylor has called Booker PLC “one of very few British companies to have achieved a successful metamorphosis from a colonial plantations company to a modern international business.” One constant, however, has characterized the company’s nearly 200-year evolution: a focus on food products and their distribution. In the early 1990s Booker managed the United Kingdom’s biggest food wholesaler, a leading food processor, and the world’s largest breeder of broiler poultry. The company also maintained a small book royalties division that awards the annual Booker-McConnell Prize for fiction. Booker’s products and services are sold in more than 70 countries in Europe, the Americas, Africa, and the Far East, but the vast majority (82.3 percent) of its 1994 operating income was generated in the United Kingdom.

Booker’s history is inextricably linked to Europe’s imperialist past. When the Congress of Vienna divided the northeast coast of South America among Great Britain, the Netherlands, and France in 1815, enterprising merchants from those countries moved quickly to exploit the region’s natural resources. The Booker brothers—Josias, George, and Richard—were among these entrepreneurs. Josias was first to make the trip overseas. He arrived in the British colony of Demerara (later British Guyana) in 1815 and obtained employment as a manager of a cotton plantation. Over the course of the next two decades, Josias and his brothers set up several merchant trading houses in Liverpool in anticipation of a flourishing sugar and rum trade. They capped their preparatory activities with the 1834 establishment of Booker Brothers & Co. in British Guyana and the acquisition of their first transport ship the following year. After Richard Booker died in 1838, Josias and George consolidated vertically, purchasing sugar plantations throughout British Guyana.

As is often the case in family firms, generational changes precipitated a dramatic transformation of Booker Brothers. In 1854 Josias Booker II (eldest son of Josias I) and John McConnell (who had worked as a clerk for the Bookers since 1846) created a separate new partnership called the Demerara Company. Upon the deaths of Josias I and George in 1865 and 1866, respectively, Josias II and John McConnell assumed control of all the Booker properties, including the sugar plantations and trading companies in Britain and South America. According to a 1987 essay in Milton Moskowitz’s The Global Marketplace, the new generation “became the principal shopkeepers of the colony,” building a formidable trade during the late nineteenth century. Their “Liverpool Line,” established in 1887, became one of the top shipping links between South America and Europe.

After Josias II died in the early 1880s, John McConnell inherited control of Booker Bros. & Co., George Booker & Co., and his own John McConnell & Co. McConnell’s sons, A.J. and F.V., took possession of the three businesses in 1890 and merged them in 1900 as Booker Brothers, McConnell & Co. Ltd. Guyanan operations had by this time expanded to include sales of food and general merchandise at the retail and wholesale levels.

The company prospered throughout the early twentieth century by maintaining its concentration on the sugar and rum trade and limiting its acquisition activities to the Caribbean region. Booker McConnell made its first public stock offering in 1920 and was listed on the London Stock Exchange that same year. The company name was shortened to Booker, McConnell Ltd. in 1968; in 1986 it was renamed Booker PLC.

Political unrest in Guyana during the early 1950s prompted John “Jock” Campbell, chairman of Booker from 1952 to 1967, to diversify both geographically and commercially. Diversification became imperative after Guyana won its independence from Great Britain in 1966 and elected a Communist government. Booker was eventually compelled to sell its sugar plantations and other businesses in that country to the government. Ironically, Guyanan and other Caribbean officials asked Booker and other British sugar moguls to help manage their struggling operations in the early 1990s. Their request for management advice prompted the formation of Booker Tate, a joint venture with Tate & Lyle, in the early 1990s.

Campbell’s “hedge-building” investments in the United Kingdom, Canada, and central Africa varied widely, from engineering to supermarketing to agricultural consulting. One of the most unusual diversifications made during this era was a division the company called “Authors.” This highly unusual sideline developed after the discovery of a loophole in the British tax code that allowed the conglomerate to purchase an author’s copyrights, pay him or her a fat fee partly at the expense of the taxpayer, and then collect the royalties. Agatha Christie and Ian Fleming are just two of the bestselling authors in Booker’s stable.

The Authors venture soon spawned another celebrated aside. According to Booker’s 1994 annual report, Fleming suggested to Campbell over a game of golf that the company pump some of the millions it was earning on the backs of writers back into the literary community. Although Booker is reluctant to give the creator of the James Bond character full credit for the idea, his suggestion influenced the 1969 presentation of the first Booker McConnell Prize for Fiction, which is bestowed upon the best novel published in Britain by a writer from the British Commonwealth. P.H. Newby’s Something to Answer For won the first Booker Prize, which has become the most coveted and highly esteemed award in British book publishing. The recipient of the honor receives a cash award, and the status of the prize is so great that novels that are short-listed for the award often see dramatic jumps in sales. In 1993 the company bestowed its first Russian Booker McConnell Prize to Mark Kharitonov for his Lines of Fate. In 1994 Scottish author James Kelman won the British Booker—and a £20,000 (US$31,600) check—for his novel How Late It Was, How Late.

Booker’s business focus shifted in the late 1970s and early 1980s. The company divested itself of its money-losing engineering interests, sold its last remaining import/export subsidiary, and made several acquisitions in agribusiness and food distribution. Perhaps anticipating increasing demand for low fat, relatively low-cost sources of protein, the firm’s acquisitions included poultry breeding operations and fish breeding and processing businesses in the late 1970s and early 1980s.

One of the company’s first transitional moves came with the 1978 purchase of ten percent of International Basic Economy Corporation (IBEC). IBEC had been founded by Nelson Rockefeller and his brothers in 1947 in the hopes of profitably boosting developing countries’ economies. Arbor Acres, an American producer of broiler breeder stock that had been operating since before World War II, became part of the IBEC in 1959. Arbor Acres hoped to expand its chicken breeding network from the United States to Latin America, Europe, the Middle East, and Asia. But when IBEC’s sales dropped precipitously in the late 1970s, the Rockefellers elected to liquidate. Booker helped that process along, increasing its share of IBEC to 45 percent in 1980 and a majority interest by 1985. Rodman C. Rockefeller, Nelson’s son, served as chairman of Arbor Acres Farms and on Booker’s board of directors into the early 1990s.

Infrequent acquisitions of fish breeders and processors in the late 1970s, 1980s, and early 1990s slowly evolved into a significant sector of Booker’s business. The company bought W&F Fish Products in 1978, Atlantic Sea Products in 1987, and Marine Harvest International in 1994. By that time, Booker’s annual report boasted that it was the largest specialist seafood group in the United Kingdom.

Booker also invested heavily in health foods during the 1980s. The company made at least four acquisitions in this industry in 1986 alone, and continued its buying spree in ensuing years. Health food holdings during this period included Britain’s largest health food chain, Holland & Barrett; La Vie Claire, a prominent health food company in France; vitamin and nutritional supplement manufacturers in the United States and Great Britain; and several organic food producers.

During the last half of the 1980s, Booker acquired several wholesale food distributors, including E.C. Steed (1986); Copeman Ridley (1987); J. Evershed & Son (1988); Linfood Cash & Carry (1988); and County Catering Co. (1988). By the end of the decade, the company had amassed Britain’s largest food wholesaling business. Its customers, which numbered in the hundreds of thousands, included independent grocers, convenience stores, and caterers. It was around this time that the company shifted its business strategy to concentrate primarily on food wholesaling and distribution to the catering trade. Booker sealed its leading position in that industry with the 1990 acquisition of Fitch Lovell PLC, a leading processor and distributor of fish and other food products, for £279.7 million.

In keeping with its new focus, Booker divested several peripheral businesses during this period. The company sold its chain of Budgen convenience stores, which had been purchased during the 1950s-era diversification, in 1986. The French health food interests were divested in 1989, and those in the United Kingdom were sold in 1990 and 1991.

Booker purchased the balance of Arbor Acres’ equity (ten percent) from the Rockefellers in 1991 for $22 million. Under its new management, Arbor Acres had grown to become the world’s largest broiler breeding company, with customers in over 70 countries worldwide. It had emerged as the cornerstone of Booker’s American agribusiness division, which also included North America’s leading turkey breeder, Nicholas Turkey Breeding Farms, and CWT Farms International Inc., a producer of broiler hatching eggs.

Booker adjusted its organizational structure in the early 1990s by establishing four primary divisions: food distribution, which included wholesaling and food service; food processing, which incorporated operations producing fish and prepared foods; U.S. agribusiness, comprised of the poultry breeding operations; and U.K. agribusiness, which included salmon farming, plant breeding, sugar industry services, and forestry. Food distribution contributed about half of the company’s net income in the early 1990s, while the international agribusiness and fish processing chipped in about 20 percent each.

Booker has been characterized as a “dull but worthy” company. Hectic competition in the British supermarket industry, however, may drag the distributor into the limelight. In 1992, for example, Booker launched its first consumer advertising campaign in support of the “Family Choice” branded products it distributed to thousands of independent grocers. These Booker clients were experiencing increased price competition from deep discounters that had entered the market to take advantage of recession-weary Brits.

Booker’s sales increased steadily in the early 1990s, from £2.93 billion in 1990 to £3.72 billion in 1994. Net income increased from £49.9 million in 1990 to £59.7 million in 1993, then declined to £45.8 million in 1994. The company blamed the earnings slide on expenses related to the reorganization of the food wholesaling and food service divisions, as well as the acquisition and rationalization of Marine Harvest International, the Scotland-based salmon farming firm. Predictably, Booker Chairman, Jonathan Taylor, expressed confidence that the company’s reorganization would begin to pay increased dividends as Great Britain cycled out of recession in the latter part of the 1990s.

Principal Subsidiaries

Booker Belmont Wholesale Limited; Booker Fitch Food Services Limited; Pullman Foods Limited; Blue Cap Logistics Limited; Arctic Seafare Limited; Booker Countryside Limited; Booker Overseas Trading Limited; Booker Tate Limited (50%); Fletcher Smith Limited (65%); L Daehnfeldt A/S (Denmark); McConnell Salmon Limited; Agatha Christie Limited (64%); Glidrose Publications Limited (51%).