Rana's Artisan Bakery
Rana’s Bakery is an award-winning gluten free, sourdough bakery, where all products are also vegan.
Diagnosed with Coeliac disease 8 years ago, Rana was frustrated with a lack of great tasting bread with proper crusty crusts. She wanted tasty alternatives, that were not full of sugar and preservatives, but something more natural! Rana launched the bakery in October 2015 with the aim of supplying the the best tasting gluten free bread, driven by her desire to have great bread back in her life.
Rana's Bakery continues to establish itself as the premium go-to bread for those on a gluten free and/or vegan diet wanting great-tasting sourdough. All products are free from 14 major allergens and are yeast & refined sugar free. Their flavour and texture comes from their unique sourdough recipes.
Rana's website primarily serves the B2C market. B2B clients are numerous and continue to grow, including hotels, cafés, restaurants and delis, including Harrods and Deliciously Ella to name a few.
The need for this capital injection is to allow a major new contract that Rana’s has agreed, to come to fruition.
Rana's has developed a gluten, dairy and egg free sourdough pizza base for a major food manufacturer, boasting a multi-billion pound turnover. They have agreed to underwrite the cost of equipment for Rana's to produce their pizza base. It is expected to be the leading 'free-from' pizza available and be in one of the UK’s largest supermarkets.
The capital also allows expansion of the business to keep up with the growth in demand for Rana's unique 'free-from' food products. The demand for 'free-from' breads continues to grow, and we believe that the combination of healthy, gluten free, sourdough, and vegan puts Rana's in an extremely strong position to make continued gains in the market with their premium product range.
Another serious interest from a major retailer has only been put on hold due to size, and this cash injection will allow for growth of Rana's to hopefully engage with the retailer as well.
Substantial accomplishments to date
2014 - 2015
Research, Development, planning and launching of the business.
October - Co-founders Rana and Alexander leave their full time jobs.
January 2016: Free From Award shortlist.
March 2016: Exhibited at Allergy + Free From Show Scotland.
March 2016: 2 x Free From Awards (small producer and store cupboard).
April 2016: Started selling through Yumbles marketplace.
May 2016: Exhibited at Freefrom Festival.
June 2016: Started baking for the gluten free concession at Selfridges.
June 2016: Started selling baked goods online.
June 2016: Exhibited at Taste of London.
July 2016: Exhibited at Allergy + Free From Show London.
August 2016: 2 x Great Taste Awards (Super Sourdough and Ingenious Flatbread).
August 2016: Exhibited at Big Feastival.
September 2016: Launched new products.
October 2016: Started developing new trade customers.
Jan 2017 - Jan 2018
Food service sales grew 685%*.
*Based on unaudited management accounts.
Great Taste 2016 Award - Super Sourdough.
Great Taste 2016 Award - Ingenious Flatbread.
Free From Food Awards 2016 Store Cupboard, commended - Nearly Rye.
Free From Food Awards 2016 Small Producer, commended - Nearly Rye.
Free From Food Awards 2017 Small Producer, Gold - New Italian.
Free From Food Awards 2017 Store Cupboard, Silver - Bold Buckwheat.
Quality food Awards 2017, Free From Bread Mix, Winner - Super Sourdough.
Free From Eating out Awards 2017, food manufactured for food service, silver - Sandwich Loaf.
Awarded BRC certification Grade B in November 2017.
Revenues are generated through both B2B and B2C sales.
B2C sales are minimal currently with huge potential that has not been adequately tapped due to current size, workload and management's focus on B2B sales. Rana's has a huge opportunity to develop the brand, becoming a leader in quality gluten free bread and bread-based products. We've already had interest from an upmarket supermarket, so we aim to start selling to these sites across the UK.
Market-wide we have seen B2B sales continue to grow and the ongoing move to cater for an increasing demand in all aspects of the 'free-from' market, allowing for continued growth in an evolving market. As mentioned above, there is a contract in place with a huge food manufacturer to supply pizza bases for a major retailer. This however is only the first step with this manufacturer, with potential opportunities for a whole host of other products. Additionally, the products can be produced in far greater quantities to allow for supply to other customers.
Use of proceeds
Proceeds from this funding round are intended to be used for the following:
Purchase equipment to expand operations and start supplying the pizza bases for the contract early summer.
Update website and maximise social media marketing.
Extend existing manufacturing space to allow for more capacity.
Bring in more staff and train them on the production process cross the business.
Update branding and packaging for retail products.
Expand the bakery unit to allow for the increased production.
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Rana’s Bakery has an EU-wide exclusive licence to the IP used in their recipes for an initial up-front payment, which has already been made. This licence is continuing and can only be terminated by a breach or a change of control. Change of control is defined as any changes which result in the initial shareholders of the business to own less than 51%, any new shareholder controlling more than 25% of the business, or any merger, consolidation, or reorganisation of the business. In these circumstances any such changes must be agreed by the licensor for the IP agreement to remain valid.
Rana’s Bakery has a loan outstanding with NatWest Bank, currently with a balance of £13,493.91, repaid at £405.56 per month. Additionally, the business has a directors loan outstanding of £65,302, which is typically paid back via monthly instalments of £1,100, although the company is not bound to make these repayments. Investor funds will not be used to repay either of these loans.
Rana’s Bakery has recently agreed to supply a large customer, which has necessitated significant investment to allow fulfilment of this contract. The investment in machinery and equipment is circa £100,000, half of which is financed by an asset backed lease agreement with a term of 36 months and interest rate of circa 9.5%. As per the terms of the supply agreement, the customer has agreed to underwrite the cost of the investment in machinery and equipment. Hence, the supplier has agreed to purchase a significant quantity of goods at a set price premium to cover this capital outlay, or otherwise compensate Rana’s Bakery.
Rana's Bakery has several different sales avenues.
Our largest growth area has been food service*. We have seen there are a limited number of companies providing gluten free breads and bread products to restaurants, delis, cafes, etc. In our view, the ones that are available are either very low quality, or have very high prices, or both. We've won several clients from other suppliers, because of what we have been told is the higher quality and taste of our products, at a more reasonable price.
In our view, the other opportunity in food service is white label goods. We have been approached by a large retailer to provide white label free-from products in future, for both ready-to-eat convenience food and also for whole bread loaves. We see a huge opportunity in this space for high-end, gluten-free, vegan products.
Our other sales channel is the consumer market. We believe that the customers from our e-commerce site are consumers choosing to eat gluten free, either for health or lifestyle reasons. We also have a large vegan following, which we are confident continues to grow month on month, such as through expansion to supplying well-known vegan restaurants.
*Based on unaudited management accounts.
Characteristics of target market
The free-from market is continuing to grow rapidly, and we believe the free-from shopper is now much more discerning about the products they are buying. We feel that consumers are looking for high-quality, healthier 'free-from' products, and don't want to feel like they are missing out on quality food just because they are eating 'free-from'.
Alongside Coeliacs (who have been estimated to represent about 1% of the population), a large portion of the population choose to eat gluten free for health reasons (perceived or real).
The 'free-from' grocery market is a fast-growing sector and is now said to be worth more than £800m. The 'free-from' sector is expected to grow by a further 50% by 2021. 45% of the UK population now claims to buy into 'free-from' categories more than once per month.
There has also been a huge rise in the number of people choosing to follow a vegan diet for health or ethical reasons, with an increase of 360% between 2006 - 2016.
We have used several marketing approaches, all of which have been as low cost as possible. We aim to maintain this strategy but utilise it better, by structuring our marketing push across all platforms in similar fashion. We use periodic newsletters, twitter, facebook, and instagram as our main outlets for information. Investment in the website should allow far greater reach, utilising various aspects of SEO.
Our social media should have a bump with more time being devoted to it once we have more money to invest in the company, as this will allow attention to be diverted from some of the more regular aspects of bread production to marketing, as well as client meetings. We've had endorsement from high profile bloggers including Deliciously Ella, and London Paleo Girl, which we will continue to pursue.
Our main marketing strategy will however be direct communication by management with prospective trade clients, pushing the products with national and multi-national retailers.
There are a number of gluten free bread offerings but in our view the quality and artisan sourdough nature of our breads sets it far above the competition.
In addition, despite the massive growth in market and profile, there seems to still be limited makers of artisanal gluten free bread. We believe our core products are unique; being free from 14 major allergens and refined sugar and are suitable for vegans, which is another growing trend.
The main distribution channels for our competitors have been supermarkets, or physical shops. Online shopping continues to grow, and it is this that our retail-based website continues to take advantage of.
There has been much criticism directed at the leading gluten free bread brands, which consumers believe do not offer value for money, are unhealthy and filled with artificial ingredients and sugar. While we are not the cheapest bread available, we believe we offer value for money when comparing our products to any handmade artisan sourdough bread (gluten-free or otherwise).