Skinny looks like growing fatter

FOOD manufacturers do a good job of feeding the nation but for most of the last decade they have left investors hungry.

Even giants such as Unilever have difficulty riding market swings. Smaller firms have the additional problem of being ruthlessly squeezed by their big supermarket customers.

So the odds were against James Lambert and his team at Richmond Foods when they decided to try their luck in the ice cream market. Ice cream has long been doubly dangerous, because it is dominated by Unilever (Magnum, Solero) and Mars, which seldom take kindly to impertinent rivals snapping at their heels.

The UK market proved too tough even for the formidable Nestle, which pulled out - leaving Lambert to buy its brand rights, including Yorkie, Fab and Toffee Crisp.

That has enabled Yorkshire-based Richmond to grow strongly. Last year sales reached £127m and pre-tax profits topped £10m. The shares have risen more than 40% in a year to 497 1/2p, valuing the group at £115m.

That is still bite-sized against its rivals. But Richmond has found two powerful allies - Sam Pugliese and Marc Wexler. You may never have heard of them, but in the ice cream world they could be the new Ben & Jerry.

The two New Yorkers are the men behind The Skinny Cow, a low-fat ice cream that has taken the US by storm - and, as they put it, is moo-ving to Europe.

Starting 12 years ago in a local delicatessen it is now on sale in 18,000 US supermarkets, with retail sales topping $100m (£55m) a year and growing like mad.

This has made a fortune for Sam, Marc and their Silhouette Brands company - so much so that some of their investors are challenging them to put it up for sale.

Richmond, prompted by Asda and its Wal-Mart parent, has been making-Skinny Cow bars in Plymouth since January. They sell in Asda at £1.98 for a pack of four, in flavours such as Very Berry and Chocolate Fudge.

Pugliese, who came to London this month to see for himself, is delighted with the response. Richmond claims they are outselling Unilever's Magnum Light and Slim-Fast.

Each Skinny bar has between half and one gram of fat, and 70 to 90 calories. A normal ice cream has 14 to 18 grams of fat and 250 to 280 calories. Skinny is so lean that it is not strictly an ice cream at all, but a 'low fat iced dessert'. Whatever you call it, customers are flocking to buy.

Ice cream and healthy eating seldom agree. The 'healthy' sector only had UK sales of £28m last year, and has been shrinking. Lambert and his chairman Ross Warburton (of the baking family) hope that Skinny can give it new life. In the US, the brand is being extended into other low-carb foods.

Richmond must tread carefully against its giant rivals. So far its footwork has been nimble. On Wednesday it should report interim profits of £2m - not bad for an ice cream seller in winter. Its broker Numis expects £12.5m full-year profits, putting the shares at 12.6 times earnings. They should have further to go - with Skinny leading the way.