Much-loved Scottish island business aims to double in size

Arran Sense of Scotland, which has a portfolio including the long-established After The Rain range and supplies upmarket hotels, has just enjoyed the best year in its history, with strong trading in the first six months of the current financial year.

Janet Russell, who founded the business with her late husband Ian in 1989, remains an ambassador for the company. Her sons are still involved in the business in senior roles. Older son Andrew is sales director, while younger son Duncan is operations director based at the Home Farm factory at Brodick on Arran.

Meechan, a chartered accountant, said: “In the year to February 2024, we had the most successful year in the business’s 35-year history.”

Reflecting on the strength of the performance in the first half of the new financial year, he added: “It looks as if we are going to take another step up on that again. On an underlying basis, we have doubled the size of the business since before Covid.”

He noted this doubling was in terms of turnover: “Our goal and our plan is to double again in the next three years. From a profitability standpoint, we are very profitable as a business, but we have a lot of infrastructure, overheads, in our business that is built to service a bigger business now we are investing for the future. The profitability of the business is going to increase exponentially as well.”

Arran Sense of Scotland employs 60 people. Around 30 of its workforce are based on its island home, where it has its factory operations as well as retail and office staff. Its product range includes body and hand lotions, bath and shower gels, shampoos and conditioners, fragrances, bath salts and oils, soaps, natural deodorants, shaving products, and candles and diffusers.

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Meechan reflects on the chance event that led to the business being established 35 years ago: “It was Ian and Janet Russell who founded the business in 1989. They flipped a coin to decide if they were going to persist with what was a budding marmalade, jam, mayonnaise-type business, or pivot across completely to beauty and personal care.

“Janet won the toss. Janet was always a big advocate of how well a beauty and personal care business from Arran could do.”

Highlighting export ambitions, while noting a move into Hong Kong and mainland China in recent months, he said: “That is probably the area where I see the most potential because there is a lot of green grass there.”

However, he expected the percentage splits of Arran Sense of Scotland’s turnover between channels to remain about the same as the business grew, adding: “All the channels we have today will be a huge part of getting that growth.”

About 40% of sales comes from e-commerce, with around 20% from branded retail sales at its shops on the island and Buchanan Galleries in Glasgow, and 40% from business-to-business channels, taking in export, hotels and independent retailers.

Meechan highlighted the huge growth in the e-commerce part of the operation during the pandemic, which involved himself and other staff sleeping in sleeping bags at the firm’s mainland warehouse at Dundonald in Ayrshire, where they were fulfilling orders. He noted that e-commerce fulfilment had since been outsourced, highlighting the benefits of this for the business.

He emphasised Arran Sense of Scotland had been able to keep on all of its staff through the coronavirus pandemic, with no redundancies.

He noted, too, the business had had a four-year plan “ready to go” at the end of 2019, which would have enabled Endless to exit in line with the normal private equity cycle. He said: “We then got through Christmas 2019 and the world fell apart in early 2020 with Covid. About 80% of the business closed overnight with Covid.

Arran Sense of Scotland’s factory at Brodick (Image: Arran Sense of Scotland)

“Our business back then was very reliant on our own retail stores and the third parties’ stores we worked with as well as hospitality, primarily hotels. All of those were closed. What we had left was a small ecommerce business, which was live during that period.

“As with many businesses, we went into survival mode. A priority for me [and] a lot of the board at the time was business survival, making sure we didn’t lose any heads during that period. I am pleased to say there were no redundancies during that Covid period for Arran. Our e-commerce business went through the roof very quickly and that supported our part of the journey during Covid as well.”

While noting some businesses had seen some of the ground gained by their e-commerce operations during this period given up since, he declared: “Ours has continued to flourish and continued to grow. I remember we were so busy with e-commerce we were all in sleeping bags in the warehouse, packing boxes, seeing the new orders that were going out. I didn’t fancy many more nights in Ayrshire in a sleeping bag!”

After his appointment, Meechan closed three retail outlets, leaving the business with the two it has now. He said: “When I joined we had a number of retail stores losing money. We had to shrink that back. We had to close a number of stores.”

The outlets closed were at Gretna, Silverburn shopping centre in Glasgow, and in Edinburgh. However, Meechan sees potential to open further retail outlets over the next 24 months: “We will definitely open more branded retail stores in the next few years, but we currently have no plans to do so.”

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He highlighted Arran Sense of Scotland’s “strong emerging ecommerce business in different parts of the UK”, and potential to use data from this to decide where new stores might be best located. He said about 50% of e-commerce customers were in Scotland, with a further 50% in England. Meechan highlighted various “hotspots” in England, adding: “We would obviously use that data to inform any store openings in the future.”

Meechan revealed it would take between £60,000 and £100,000 to “get a store going”, with costs depending on the locations: “London will be a lot greater than Manchester and Glasgow.

“We had five stores – branded retail stores – when I joined. Over my initial 18 months, we closed three of those. Some of those stores were highly seasonal. You were making all your money over the Christmas period.

“We are absolutely committed to the retail stores we have, and part of our retail strategy will be to expand that over the next 24 months.

“We can track very much where our current ecommerce consumers are.”

He noted Arran Sense of Scotland is currently in four export markets. These are Hong Kong, mainland China, Sweden, and North America. The business had been in six export markets. However, it had not gone back into two European Union markets in which its distributors “never made it out of Covid”. He added these two markets could be serviced through Arran Sense of Scotland’s e-commerce channel. The business was looking at six or seven other export markets. He did not name these, noting it was “very early days”, but did underline his belief in the potential for the business, as a Scottish brand supported by the story of Arran, to do well on the global stage.

“Taking Arran to a global stage is a huge thing for us. I am from a spirits background. I am particularly aware of how well Scottish provenance brands can work in North America and the Far East. Hong Kong and China we have just got off the ground.”

He revealed “a list of six or seven” other priority markets Arran Sense of Scotland is “going after as well”: “Consumers in those markets polarise very well to most Western brands but particularly ones from Scotland.”

He noted the rebranding from Arran Aromatics to Arran Sense of Scotland in 2016 had not been communicated as well as it might have been given the issues facing the business at that stage.

“I think driving visibility for Arran and the brand has been a huge priority for me and the team.”

He added: “That has been a huge priority for us. We spend a considerable amount each year on marketing the brand and the island, every single year.”

Asked about Arran Sense of Scotland’s presence in hotels, including the Auchrannie Resort on the island, he replied: “Hotels for us – we specifically only work with premium four, five-star hotels for our brand. We work with a number of bigger groups such as Malmaison hotels, the Caledonian Sleeper, and Virgin Hotels, who are looking to establish more of a footprint in the UK and Europe.

“That is a channel that works for us from a business perspective. It is good business for us to have. It also creates a halo effect for the brand, and it is a great route to new consumers for the brand.

“Hotels – we love them. It is a great brand visibility channel for us.”

He highlighted the business’s strong investment in product development and its launch of new ranges.

Meechan also spoke about Arran Naturals, consumers of which can now return their packaging to the business to be re-used, and the Kildonan and Sannox ranges. He also flagged the part feedback from customers plays in new product development and launches.

He noted that the investment in Arran Sense of Scotland by Endless was relatively small for the private equity outfit and an “emotional” one. In the context of Endless’s 2017 investment, one of the partners was in Northern Ireland and another was from Glasgow – and both were aware of the business.

Asked about the exit timeframe now, Meechan said: “In terms of the exit horizon, I guess it will be when we are approached by a potential way out – that would typically be addressed by Endless.”

He said his remit as chief executive and chief financial officer was to “keep driving the business forward” and pursuing the plan.

Meechan added: “I am massively excited by the future, as are the family.”

He revealed he had caught up recently with Andrew, Duncan and Janet Russell at the Seamill Hydro Hotel in Ayrshire – marking the 35th anniversary of the business – and that they had talked about “how far the business has come”.

Declaring that the “heavy lifting bit” had been done to get the business back to where he and the team wanted it to be, Meechan added: “We have a plan that has been consistently executed. I am pleased to say it has delivered what we expected to deliver.

“The future is bright, certainly in my eyes. I expect big things for the brand and the business going forward.”