Jaffa Cakes - definitely not biscuits - prepare to take on imitators
McVitie's produces 2,000 Jaffa Cakes a minute and has plans to fight off imitators.
By Harry Wallop, Retail Editor
9:00PM BST 06 May 2012
When pastygate blew up in George Osborne's face six weeks ago, there were some wry smiles in Stockport. Because this is the home of the Jaffa Cake, part chocolatey-orange treat, part tax conundrum.
All 1.19bn of these funny little biscuits made every year by McVitie's are produced in its North-West factory.
But, of course, they are not biscuits. They are cakes. They were deemed to be so 20 years ago by a judge after a long-running and costly dispute over the VAT status of these treats.
In the eyes of the taxman, a cake is a staple food and, accordingly, zero-rated for the purposes of VAT. A chocolate-covered biscuit, however, is a whole other matter – a thing of unspeakable decadence, a luxury on which the full 20pc rate of VAT is levied.
McVitie's was determined to prove it should be free of the consumer tax. The key turning point was when its QC highlighted how cakes harden when they go stale, biscuits go soggy. A Jaffa goes hard. Case proved.
I've come up to the red-brick, chimney-stacked factory (just how they look in children's picture books), to see for myself how this chocolate-covered, jam-filled, spongy disc has ended up becoming Britain's most popular "product in the biscuit category" as well as the original VAT-fighter.
The factory, which covers more than 10 acres, produces 2,000 Jaffa Cakes a minute and, as hardly any are exported, that works out at 46 for every household in the country a year. In sales terms, it is Britain's biggest biscuit. Sorry, cake.
Sales have been ticking along nicely during the consumer downturn, beating the 3pc growth in the sweet biscuit market.
But there is a threat. McVitie's doesn't own the rights to the Jaffa Cake name. Though it has been making the things for 85 years, it failed to register the name as a trademark. :shock:
This has meant that a number of supermarkets have started to manufacture their own-brand Jaffa Cakes – especially so in recent months as competition has hotted up in the grocery market, and the likes of Tesco and Sainsbury's have re-launched their own-brand products. Aldi, in particular, has turned up the heat by selling 24 Jaffa Cakes for 89p, compared with a recommended retail price of £2.19 for the McVitie's Jaffas.
Philippa Tilley, brand manager for Jaffa, is confident her company can gain share, not least with the possible launch of a milk chocolate cake: "It's quite a feel-good brand and a light-hearted brand. It cheers you up in a way that a retailer-brand wouldn't."
And, of course, the fact it is free of VAT means it can charge shoppers 20pc less than if it was just a jam-filled, chocolate-covered biscuit. This has been a crucial help during a time when food ingredient inflation has surged ahead, with flour and sugar both increasing by about 30pc.
Two years ago McVitie's was forced to up its prices and a 24-pack of Jaffas broke through the £2 barrier.
Brian Small, the manufacturing manager, says: "Well, it [the lack of VAT] is just a fact of life for us. But it does benefit us in terms of the margins we can charge."
But even my children can tell it's a biscuit. You eat it with a cup of tea, you serve it alongside a bourbon or custard cream, they live in the biscuit barrel, not the cake tin.
"You surely aren't cruel enough to do that," he shoots back. "It'll make all your other biscuits soggy." Really? "Yes, it's the high moisture content in a Jaffa Cake."
Time to investigate. The factory looks as if it has been designed by Professor Heinz Wolff, the slightly barmy scientist who used to present The Great Egg Race. Each biscuit goes on a journey of nearly a mile along endless twisty, turny conveyor belts which rise up to the top of the building and down again.
It never stops moving and takes 18 minutes for a Jaffa to be created from a dollop of dough pumped on to a vast, moving baking sheet, through a 100 yard-long oven, out the other side (under a laser beam to ensure it is the right size), cooled, before a little dollop of clear orange jam is placed on top, then dipped (upside down) in liquid chocolate, cooled once again, before it is sorted, packed, wrapped and ready for delivery.
The factory is strangely empty. The process is almost entirely mechanised, with just the odd quality-control worker standing by the edge of the moving line.
The joy is being able to pick, at any time, a half-ready Jaffa.
Mr Small says: "We positively encourage [the workers] to eat as many as they want. It's the best quality control we have. Those that work on the lines have very acute palettes."
A warm Jaffa, with melted chocolate on top, is a thing of wonder – intensely citrusey and far sweeter than when cooled down. Also, the sponge base has a lovely crispy edge, which sadly disappears in the packaging, as the moisture of the jam seeps in.
Sounds the sort of thing a biscuit would do.
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