Polly Peck is a 30-year-old British firm that cashed in on the original miniskirt then watched its fortunes rise and fall with the hemlines and fickle fashions of London’s Carnaby Street.
But since being bought in 1980 by Turkish-born entrepreneur Asil Nadir, who added International to its name and fresh produce and consumer electronics products to its businesses, the one-time trendy clothing manufacturer has regained profitability. It has also grown rapidly. Valued at less than $2 million when Nadir acquired what had become virtually a corporate shell, Polly Peck International PLC has seen its worth appreciate to nearly $1.2 billion.
This year, the company made its first move into California, the better to exploit markets on both sides of the Pacific. In January, it acquired a Fresno food brokerage, Mendelson-Zeller Co., and later opened a Western office in Century City to direct operations.
By acquiring Mendelson-Zeller from Campbell Soup for $4.9 million, Polly Peck gained a source of supply for existing markets around the Pacific Basin, said Mark Ellis, who heads Polly Peck’s New York-based subsidiary, PPI Enterprises. Because of the breadth and depth of the state’s farm production, which produces about 250 commercial crops, Ellis said he expects it to become the center of Polly Peck’s agricultural operations.
Mendelson-Zeller will also provide the key link in developing “a two-way business with the Far East” and California. Exports from the state should benefit from Polly Peck’s established marketing outposts in Japan and Hong Kong--outposts that also line up sources of produce for export from the Far East to the United States, Ellis said.
The Fresno acquisition followed the company’s purchase last year of a similar operation in the East, New York State’s Prevor Marketing International. Ellis predicted that the two subsidiaries “will now make Polly Peck a major factor in the distribution of fresh produce on a nationwide basis.” Other U.S. agricultural acquisitions reportedly are under study in the Midwest.
Polly Peck’s approach is to integrate its produce operations from the grower to the retailer. Subsidiaries provide shipping materials, storage and packing facilities, transportation (including a fleet of 10 freighters) and marketing services.
“Much of our success emanates from the integrated nature of what we have,” Ellis said. That is because the produce business tends to be highly fragmented, in the United States as elsewhere. “There’s plenty of room for friendly competition” to move in and acquire local companies.
“In the food business you’ve seen a lot of consolidation,” he said. “There’s an internationalization going on.”
By acquiring food brokers close to producers around the world, Polly Peck benefits in two ways: It taps into longstanding relationships between the broker and the farmers who supply it while also exploiting its local marketing savvy. Moreover, Ellis said, Polly Peck’s increasingly global presence enables it to deal in seasonal crops year-round.
“People in New York now are used to having strawberries all year,” he said. “That wasn’t possible a few years ago. It’s the same thing now in London, Hong Kong and on around the world.”
Still, he added, market requirements vary widely from continent to continent. For example, a variety of grapefruit that sells well in Europe might not please Japanese consumers. “Having a presence in the market will help you sell as well as introduce new types of products for export.”
The company’s move into marketing fresh produce developed from founder Nadir, now a British citizen, who observed that farmers in his native Turkey were producing more than they could sell domestically and that exports were held back by a lack of shipping cartons. His response was to start a firm that makes boxes. He then filled them with what had been surplus fruits and vegetables and sold the produce in Europe, benefiting from Turkey’s associate membership in the European Community.
A few years later, in 1984, Nadir started up what is now the Vestel electronics plant to make color television sets just as color broadcasts became available in Turkey. From that beginning, consumer electronics has grown to become the company’s No. 2 activity, and Polly Peck today maintains a marketing and coordinating office for electronics products in Santa Clara, Calif.
It produces consumer goods in Taiwan, including audio equipment and peripheral gear for computers, and maintains other plants in Hong Kong, Italy, the United Kingdom and Turkey. And it is expanding its original clothing business into the United States, already importing casual shirts from its own manufacturers in Portugal and Hong Kong. Customers include Nordstrom.
Agriculture and consumer electronics account for 89% of total annual sales, with U.S. sales generating about one-fourth, or about $375 million.