Portmeirion Group plc

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Portmeirion Group plc

London Road
Stoke-on-Trent, ST4 7QQ
United Kingdom
Telephone: (44 01782) 744721
Fax: (44 01782) 744061
Web site: http://www.portmeirion.co.uk

Public Company
Incorporated: 1960
Employees: 537
Sales: £28.4 million ($55.7 million) (2006)
Stock Exchanges: London (AIM)
Ticker Symbol: PMP
NAIC: 327112 Vitreous China, Fine Earthenware, and Other Pottery Product Manufacturing; 423220 Home Furnishing Merchant Wholesalers

Portmeirion Group plc is one of the world’s best-known names in high-end ceramic tableware, and one of the few survivors of the once dominant British ceramics industry. Portmeirion produces a wide range of ceramic tableware designs, including its long-standing bestseller Botanic Garden. That set, introduced in the early 1970s, not only established Portmeirion as a major name in the ceramics market, but also remains its single largest-selling range. In some years, the Botanic Garden range accounts for as much as 70 percent of group turnover. Nonetheless, Portmeirion has an active design program, and each year the company invests more than 10 percent of its revenues into developing new designs and patterns. Other designs in the group’s portfolio include Totem, a reissue of one of the company’s earliest designs; Pomona, a fruit pattern introduced in 1982; Up the Garden Path; Gingko; Crazy Daisy, and others.

While most of its designs are developed in-house—and founder Susan Williams-Ellis continues to develop designs for the company—Portmeirion has joined the designer label trend. In 2006, the company teamed with Sophie Conran to introduce its first designer range of cookware. Although long focused on the tableware segment, Portmeirion launched a diversification strategy at the middle of the 2000s, targeting an expansion into nonceramic tableware and other household items. This led to the acquisition of Pimpernel International Ltd., which, through its Pimpernel, Cloverleaf and Manorcraft brands, is said to control some 80 percent of the international placemat market.

Portmeirion continues to operate its own ceramic manufacturing facilities in Portmeirion and Stoke-on-Trent; since the 2000s, the company has also begun sourcing an increasing percentage of its ceramic forms from the Far East. Exports account for 65 percent of the company’s total sales, with North America remaining the company’s largest market. Portmeirion is also highly popular in the Far East, and especially in South Korea. In 2006, Portmeirion posted revenues of £28.4 million ($55.7 million). The Pimpernel acquisition is expected to add more than £12 million ($23 million) to the group’s sales. Portmeirion is listed on the London Stock Exchange’s Alternative Investment Market (AIM), an international market for smaller companies. Chairman Arthur Ralley and chief executive officer Lawrence Bryan lead the company.

COTTAGE INDUSTRY IN 1960

The village of Portmeirion was the creation of Sir Clough Williams-Ellis, on the Plas Brondanw peninsula in Merioneth, in North Wales. Williams-Ellis had briefly attended architectural school in London before establishing a part-time practice both in London and in Merioneth in the years leading to World War I. Following the war, Williams-Ellis began developing a new idea in architecture, specifically that it was possible to develop a naturally beautiful site without destroying the landscape. To this end, Williams-Ellis began drawing up plans, which culminated with the purchase of the Plas Brondanw peninsula for 5,000 pounds in 1925. Williams-Ellis’ plans called for the construction of an entire village, built after the Italianate style, and he personally oversaw much of its construction. The village, which swiftly became a popular tourist destination, was completed in 1975.

By then, the Portmeirion name had earned a reputation as one of the most important centers of British ceramic design as well. The architect of this development was Williams-Ellis’ daughter, Susan. Raised in London, where her parents’ circle of friends and acquaintances included Virginia Woolf, Frank Lloyd Wright, and others in the Bloomsbury school, Susan Williams-Ellis herself gravitated toward a career in the arts. To this end, she studied ceramics, painting, and sculpture at the Chelsea Art School, counting such noted artists as Henry Moore and Graham Sutherland among her teachers. During World War II, Susan Williams-Ellis worked as a drafter for the government, and then taught art classes at Dartington.

Following the war, Williams-Ellis and husband Euan Cooper-Willis moved to North Wales, where they tended a farm. In the early 1950s, however, the couple decided to come to Portmeirion, to assist Clough Williams-Ellis with his project. Struggling to realize his dream, Clough Williams-Ellis had opened a gift shop in the village. By the early 1950s, the shop was losing money. Susan Williams-Ellis and Euan Cooper-Willis took over the running of the shop in 1953.

Over the next several years, the couple succeeded in turning the shop around and transforming it into a major source of income for the village. By the end of the 1950s, Williams-Ellis and Euan-Willis also took over the operation of the village itself, including its hotel, which served as an important outlet for Williams-Ellis’ growing collection of ceramics and fabrics designs. A major part of the shop’s growing success was Susan Williams-Ellis’ own ceramics designs. For these, Williams-Ellis sent her designs to Stoke-on-Trent, long the historic center of the British ceramics industry, where the designs were manufactured by the A. E. Gray pottery, which specialized in transferring designs to the ceramic pots. In 1960, Williams-Ellis decided to buy A. E. Gray, thereby gaining control of the full decorative side of the ceramics business. The purchase enabled Williams-Ellis to adapt one of her fabric designs as a tableware range, featuring an ornate, richly gilded pattern. This design, introduced in 1960, proved a strong seller for a number of years. The following year, Williams-Ellis had her first major success, with the introduction of the Tiger Lily pattern.

In the early 1960s, it remained highly unusual for a company to operate in both the ceramics manufacturing and pottery decoration sides. However, in 1961 Williams-Ellis bought a second pottery, Kirkham’s Ltd., gaining the tools and equipment to produce her own pots and tableware. Kirkham’s main product, bedpans, had little to do with Portmeirion’s own focus. Nevertheless, the acquisition enabled Williams-Ellis to develop an entirely novel range of designs. The first of these was based on a set of existing Kirkham molds, featuring a cylindrical shape. Williams-Ellis used that shape as the basis for a coffee set, which was then richly decorated with a variety of symbols to become the Totem series, launched in 1963.

KEY DATES

1953:: Designer Susan Williams-Ellis and husband Euan Cooper-Willis take over operation of Portmeirion gift shop and begin selling Williams-Ellis’ pottery designs.
1960:: Company acquires A. E. Gray Ltd., a pottery based in Stoke-on-Trent.
1961:: Kirkham’s Ltd., a ceramics manufacturer in Stoke-on-Trent, is added.
1972:: Botanic Garden pattern is launched and becomes company bestseller.
1988:: Portmeirion goes public on London Stock Exchange.
1994:: Launch of Portmeirion China as part of early diversification effort.
2006:: Company acquires Pimpernel International Ltd. and diversifies into nonceramic household goods.

Totem proved to be Williams-Ellis’ breakthrough design, establishing Portmeirion at the leading edge of the British ceramics sector. The demand for the Totem set quickly outpaced the company’s production capacity, which helped stimulate demand. Through the decade, Totem became the company’s flagship design. Susan Williams-Ellis continued to develop new pieces featuring the design, while also experimenting with new colors and symbols. By the middle of the decade, the company’s turnover neared £250,000.

LAUNCH OF A BESTSELLER IN 1972

Part of the company’s success came from its decision to hire a managing director to oversee the group’s development beyond its sales at its Portmeirion gift shop. In 1965, the company brought in George Hesp, whose professional background had been in construction materials, not ceramic giftware. Over the next several years, Hesp helped steer the company from tiny Portmeirion to become an internationally recognized name in ceramic tableware.

Williams-Ellis in the meantime continued developing new designs, launching a number of patterns, such as Samarkand and Montesol in 1965, Magic City in 1966, and, toward the end of the decade, a range of designs including Coptic Brocade and Marrakesh. The company also developed a number of new shapes for its growing range of tableware items.

The year 1972, however, marked the start of Portmeirion’s rise into the tableware big leagues. In that year, Williams-Ellis debuted her most famous creation, Botanic Garden. Adapted from a book originally printed in the 19th century, Botanic Garden’s varieties of flowers, butterflies and related patterns launched a whole new category of tableware, and by the 1980s had established itself as a mainstay of the bridal registry. The collector market too responded positively to the new design, particularly as each item in the set featured its own flower design, for a total of 34 in the entire series.

Portmeirion supported the launch of Botanic Garden, as well as its other designs, with the creation of a sales partnership with another ceramics producer, Dartford Glass, in 1972. That partnership put into place its own sales team, helping to spread Portmeirion’s designs across the United Kingdom. Yet Hesp and others at Portmeirion soon realized that the Dartford Glass partnership was not working out. Instead, in 1981, the company hired its own sales and marketing director, Martin Gulliver. The company severed its relationship with Dartford Glass—and the partnership’s sales force. Instead, Portmeirion put together its own sales team.

The move proved the right one. Using Botanic Garden as its flagship, Portmeirion stepped up its international sales expansion. As part of this effort, the company put into place a series of international sales and distribution joint ventures. The company targeted the United States and Canada, and Australia and New Zealand, setting up 50-50 joint ventures in those markets. By the end of the 1980s, the company had expanded its international distribution network to include some 30 countries. Sales of Botanic Garden clearly led the way—by 1990, that line accounted for some 65 percent of the group’s total turnover of nearly £13 million.

Portmeirion’s strong success in overseas markets helped it survive the difficulties besetting the rest of the Stoke-on-Trent pottery market. The flagging economy, and the rise of inexpensive imported tableware, had put much of the sector under extreme pressure. By the early 1990s, a growing number of ceramics companies had collapsed, while others merged together in order to achieve the volume needed to survive. Portmeirion’s own problems were of a different sort: faced with continued increase in demand, the company found itself stretched to full capacity. While this helped the company’s products maintain their collectable status, it also resulted in the loss of potential revenues and profits.

DIVERSIFICATION FOR THE NEW CENTURY

In order to boost its production and storage capacity, Portmeirion went public in 1988, listing its shares on the London Stock Exchange. While the Williams-Ellis family and friends retained a majority share of the company, the listing enabled it to raise funding to invest in its infrastructure, including the construction of a new storage facility in Portmeirion.

In the 1990s, Susan Williams-Ellis increasingly turned over design duties to others, including daughters Angharad Menna and Anwyl Cooper-Willis. Menna, for example, was responsible for the launch of Welsh Dresser in 1992, which remained a strong seller for the company until being discontinued in 2000. Menna also developed the short-lived Harvest Blue line, while Cooper-Willis stepped in with the Victorian Cook’s Collection of kitchenware in 1996.

Toward the mid-1990s, Portmeirion revealed its first interest in expanding beyond its core giftware and tableware collection. The company began investigating the possibility of licensing some of its designs, and especially the Botanic Garden series. This resulted in the launch of the Portmeirion China collection in 1994, which featured some of the Botanic Garden motifs, among other designs.

Toward the end of the 1990s, the company made an effort to reduce its reliance on Botanic Garden, launching a new collection of more contemporary designs, called Pomona, which also marked the group’s attempt to move from its traditional Victorian-era design style to a more contemporary category. By then, however, Portmeirion had once again come under pressure, as the new slump in the international giftwares market—and particularly the increasingly important Asian market—brought about a drop in the profits. At the same time, the shift in manufacturing toward the lower-wage Asian regions made it still more difficult for Portmeirion to compete.

The company brought in a new CEO, Lawrence Bryan, at the beginning of the 2000s to help reshape it for the new century. Bryan, who had previously worked for the company as a vice-president in the 1980s, then later rejoined Portmeirion to become president of the company’s U.S. subsidiary in the late 1990s, once again steered Portmeirion toward diversification in order to ensure its future. This led the company to bid for the rights to the popular A Christmas Story series, developed by designer Susan Winget and originally produced by International China. Portmeirion took over the line for the 2003 Christmas season, and supported the contract by the launch of a new housewares division, P.S. Portmeirion Studio.

The company sought to deepen its involvement in the housewares segment as it moved toward mid-decade. At the same time, Portmeirion sought to retool its manufacturing operations in an effort to improve its competitiveness in the increasingly Asian-manufacturing dominated ceramics industry. As part of this effort, the company shifted to the kanban manufacturing system, adapted from Japan. The company also announced plans to construct a new purpose-built distribution and manufacturing center, forecast to cost £12 million.

A new drop in the market, however, forced the company to put this plan on hold, as the group slumped into losses in 2004, and its stock was moved to the London Exchange’s AIM market for smaller international companies. Part of the group’s difficulties came from increased competition; the steady inroads of Asian-manufactured goods into the United Kingdom enabled a greater number of discounters and even supermarkets to begin extending their own product ranges beyond food items to include tableware and the like. At last, Portmeirion yielded to the pressure to outsource part of its manufacturing, and began sourcing part of its production from the Asian region. As part of that decision, the company merged its Stoke-on-Trent production into a single factory in 2005.

By 2006, Portmeirion had once again returned to profitability. The company was able to put into place its diversification strategy. In October 2006, the company announced that it had agreed to acquire Pimpernel International Ltd., for £500,000. Pimpernel, bought out of bankruptcy, was nonetheless the world’s leading manufacturer of decorative placemats. Through its three brands, including Pimpernel, Cloverleaf, and Manorcraft, Pimpernel claimed some 80 percent of the global market. Portmeirion hoped that the move beyond tableware would provide it with a broader base to meet the challenges of the increasingly global housewares market in the years ahead.

M. L. Cohen

PRINCIPAL SUBSIDIARIES

Furlong Mills Ltd. (27.58%); Naugatuck Triangle Corporation (United States); Portmeirion Canada Inc. (50%; Canada); Portmeirion Enterprises Ltd.; Portmeirion Finance Ltd.; Portmeirion Japan K.K.; Portmeirion Potteries Ltd.; S. P. Skinner Co., Inc. (United States).

PRINCIPAL COMPETITORS

Waterford Wedgwood plc; Ferro Mexicana S.A. de C.V.; WKI Holding Company Inc.; Mikasa Inc.; Royal Scandinavia A/S; Kohler France S.A.S.; Rosenthal AG (ROS); The Porcelain and Fine China Companies Ltd.; Steelite International PLC; Denby Pottery Company Ltd.; Dudson (Holdings) Ltd.