We're happy to be big fish in Iceland

HAVE you eaten a Tesco chilled meal recently? Or a Sainsbury's Taste the Difference dish? Perhaps you've tucked in to one of the new Gastro Pub products from Marks & Spencer or a Bistro meal from Waitrose? If so, you can thank, or blame, the Gudmundsson brothers from Iceland.

The latest deal to expand their Bakkavor food empire is a £485m takeover of British food company Geest, which will cement the Icelanders' position as the biggest supplier of convenience food to UK supermarkets - Bakkavor's annual sales are expected to top £1bn.

And its success could further boost the fortunes of Lydur and Agust, whose combined 30% stake in Bakkavor is worth about £110m.

Despite their great wealth, the brothers have a daily reminder of their humble origins - Bakkavor is named after the street in Reykjavik where they grew up.

'In Icelandic it means a small bay where fishing boats come to dock,' says Lydur, at 37, three years younger than Agust.

It is an appropriate name for a company that began selling fish eggs. And it is a comforting, homely story for a company that dominates the shelves of Britain's supermarkets.

Agust explains: ' Bakkavor was founded in 1986 and we started out by specialising in selling fish eggs. We bought them off the cod fishermen, processed them and sold them.

'We specialised in fish roe until 1998 when we acquired a small seafood company in France. Then in 2001, we bought a chilled food business, Katsouris, in Britain. The UK is one of the world's biggest markets for fresh chilled convenience food and we decided to focus on that and sold the seafood business.'

So while the Gudmundsson brothers have kept their company's listing in Iceland, they have for all practical purposes moved themselves and their business operations to Britain. It is this combination of small-town origins and international ambition that has made Icelandic businessmen such as the Gudmundssons a phenomenon in Britain.

The Icelandic invasion has been led by retail group Baugur, which has snapped up a string of shop chains including Big Food Group, toys retailer Hamleys and women's High Street fashion chain Karen Millen.

The small scale of the Icelandic community is nicely illustrated by the fact that Baugur's boss, Jon Asgeir Johanesson, went to school with Lydur.

One aspect of this small-town start for the Bakkavor bosses is their unpretentious nature. While other businesses of its scale might sport an office in the City, the Gudmundssons run their business from Bakkavor's warehouse in an industrial estate near Hanger Lane in west London.

They share an office that hums to the sound of the warehouse beneath them and they sit at desks next to each other.

On the left sits Lydur, dark-haired and thoughtful. On the right is Agust, taller and slightly fairer-haired than his brother. Agust is clearly the ambassador of the business and has a mischievous sense of humour.

Asked what different skills they bring Lydur says: 'I am more on the finance side.' Agust responds with a shrug as if to suggest he is a spare part in the business. 'I suppose you could say I am better at the operations or something like that,' he laughs.

As well as their business, the brothers have also moved their families to Britain. Both are married to Icelanders and both have children. Lydur lives close to the Hanger Lane office.

The Gudmundssons' ease with English is obviously one factor that has drawn them to regard Britain as a more natural home and business market than Scandinavian countries, which historically have far closer links to Iceland.

'The UK has a very different reaction to foreign business - it is very welcoming,' says Lydur.

The brothers' affection for Britain begs the question: why do they not move Bakkavor's listing to the UK stock market? The short answer, ironic given their beginnings, is because they would rather be 'big fish in a small pond'. But still they keep their options open.

'A listing in the UK is not on the horizon, but I would not rule it out,' says Lydur, 'but I would say that because I never rule out anything.'

And that neatly sums up one thing that has become clear in the City in recent years - when it comes to the Icelanders, never rule out anything.