Page last updated at 23:02 GMT, Monday, 1 June 2009 00:02 UK

Dorset bakery flourishes in hard times

By Rebecca Davis
BBC News

While profits fall and sales decline at many larger retailers, a small bakery in Dorset is growing beyond all expectations.

Emma Custard founded Honeybuns
Emma Custard, Honeybuns' owner, wants to stay independent

Sitting underneath a pink umbrella in the Honeybuns Bee Shack cafe, cake in one hand, tea in the other, you would find it hard to believe that the sugary eco-treats produced here find their way to high-speed trains, corporate canteens and supermarket shelves.

Based at a converted farm near Holwell in Dorset, the firm's bakery used to be a milking shed, their visitors' cafe a chicken hut, and their office a former pigsty.

Surrounded by green fields, birdsong and donkeys, Honeybuns' HQ is like something out of a children's story book.

But even more extraordinary is that while many big businesses are suffering the effects of the recession, this ethical food producer is thriving.

Emma Goss Custard, the founder of the company, says: "Last year was our strongest year ever, and this year looks set to be the same…. it went beyond all expectations."

Ethical business success

Honeybuns is not alone in running a successful ethical small business.

People are treating themselves with small things, rather than buying new cars
Richard Ford, Grocer Magazine

Frugi, a family-run online organic children's wear specialist, has seen its business double in the past 12 months.

And Jackie Williams, owner of the Organic Health store in Cambridge, which sells organic and locally sourced foods, is also doing well. She has seen some monthly sales this year increase by 40% compared to last year, adding to 14 years of steady growth.

Experts suggest that one reason for the success of these businesses is consumers seeking out more affordable treats.

People are "treating themselves with small things, rather than buying new cars", says Richard Ford at the Grocer Magazine.

Fundamental shift?

Honeybuns bakery has a variety of successful products
Honeybuns bakery has a variety of successful products

But some argue that the success of these companies might be part of more fundamental shift in consumer behaviour.

FairTrade, which certifies brands which meet ethical standards, and is now sold in supermarkets across the country, argues that "consumers are calling for a new model in trade".

"Their shopping habits and decisions tend to reward (or punish) companies that meet (or do not meet) their expectations."

If this is true, then Honeybuns, with its BeeGreen tree planting projects, goldfinch habitat programmes and logs for hedgehogs scheme, is worthy of the rewards it is receiving.

Even for ethical companies that are not going to these lengths, sales are still increasing.

Vic Morgan, chief innovation officer at Ethical Superstore, an online eco-product specialist with no green projects on the side, states that "sales have been growing by 50% year on year, regardless of the downturn".

And mainstream companies like Eurostar, John Lewis and Sainsbury's have all stocked Honeybuns' products.

Annie Brolesworth –regular customer at Alweston Post Office
Annie Brolesworth is a regular Honeybuns customer at Alweston Post Office

Train company First Great Western stocks them partly because of "consumer demand, which will itself reflect ethical considerations", according to company representative Ellie Banks.

But Honeybuns hasn't forgotten about its smaller stockists.

Nick and Sally Wolmer of the Alweston Village Post Office, Dorset, say that they "always have an empty Honeybuns basket to refill at the end of the day" and can list the favourite Honeybuns products of many of their customers.

Green premium

Charlotte Drake at Honeybuns
We don't want more machines in the bakery than people
Charlotte Drake, Honeybuns

While small ethical businesses appear to be doing well, the ethical and organic product industry as a whole has taken a hit.

Supermarkets are seeing a significant decrease in sales of organic products.

Neil Saunders at Verdict Research identifies the green premium, the mark-up on some ethical products, as the cause. His observations suggest that price is still at the top of people's agenda, especially during the economic downturn.

Other industry insiders say the recession-led thriftiness is only a temporary phenomenon.

The Ethical Superstore believes it is seeing the early signs of a long-term shift.

"Interest in sustainable products has gone from being a niche to being much more mainstream…. anything sustainable is going to be part of future economic development," Mr Morgan says.

In its Retail Futures report, sustainability consultants Forum for the Future predicts that tomorrow's consumers will "search for…. products that are more 'natural', local, healthier and greener".

They advise that this desire for "authenticity" will become a "mainstream retail issue".

Outside investment

The company wants to keep close to its rural roots
The company wants to keep close to its rural roots

For small ethical businesses achieving impressive levels of growth, one issue is whether to accept outside investment, with a possible loss of control.

Neil Saunders at Verdict Research warns that by selling out to big investors "you can lose some of what made you special".

But he points out that the bulk of ethical product sales are achieved through large-scale retailers.

Therefore by choosing to stay small, ethical businesses could be missing an opportunity to have a significant influence over industry.

In the case of Honeybuns, its owner has refused numerous investment offers.

The production manager, Charlotte Drake, explains that they "don't want to become a factory".

"We want to keep the team the size it is. We don't want more machines in the bakery than people."

By choosing not to expand on a grand scale, the ethical gap in the market is being filled by larger businesses.

But Ms Custard, Honeybuns' founder, is not concerned about the possibility of supermarkets becoming a threat to her niche.

She says that "if the right values are not central to your business they won't be sincere…. customers are very savvy as to what is genuine".

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