Tunnock's time: how an iconic Scottish confectionery brand is adapting to global forces

The wood-panelled interior is covered in memorabilia of the South Lanarkshire family that has owned Scotland’s most iconic confectionery business since it was started by Archie Tunnock in a bakery across the road in 1890.

On one side, a glass case contains a model of the Maureen Mhor, a motor yacht once owned by a friend of Archie Tunnock, son of company founder Thomas. Nearby, a huge replica of the company’s famous caramel wafer biscuit – created in 1952 as a product “with a longer shelf life than a cake” – stands in front of a door leading to the factory.

Above it is a framed photo of the grandson of Thomas and inventor of the teacake, Sir Boyd Tunnock, at the helm of his sailing yacht. Its name, “Lemarac”, spells caramel backwards.

Tunnock’s stopped giving public tours of its facility some years ago. But to have the privilege of walking the factory floors in Uddingston is to enter a Willy Wonka world of seductive sweetness that takes you back to childhood. The top floor is all about the caramel wafer biscuit. Here, some of the company’s mostly female factory staff slice chunks of caramel off a sheet rolling off a covered conveyor belt that has cooled it down to a manageable consistency before it’s dropped through the floor into metal hoppers one level below.

Downstairs, more conveyor belts whisk the wafers along to be drenched in two chocolate “baths” before being propelled on for wrapping – at a rate of 500 biscuits per minute - in the red and gold striped livery that no Scot can fail to recognise.

Fergus Loudon, Tunnock’s director and husband of Karen, HR director and one of Boyd’s three daughters, flips open a clear plastic inspection window on the side of the machine so a visitor can get a proper smell. “If I could bottle that, I would,” Loudon declares.

Since its beginnings the story of Thomas Tunnock Limited - to give it its full name - has been one of preserving and growing the brand through an uncompromising dedication to the production of a select range of products that has not changed since most were created in the 1950s.

Meanwhile rivals like McVitie’s (maker of Penguin biscuits), Nestlé (maker of the Kit Kat) and Cadbury owner Mondelez have repeatedly re-invented some products as a way of boosting market share and winning new consumers.

Yet, perhaps counterintuitively, Tunnock’s has successfully stayed in its lane. In the latest Top 20 Most Chosen Scottish food and consumer goods brands ranking from Worldpanel, a data company, the company retained fourth place in 2024 from the previous year.

“Stick to what you're good at, simple as that,” explains Loudon. “Boyd wants to stay true to what he's good at, and you can understand and respect that.”

The company insists on making its own chocolate in machines from MacIntyre of Arbroath. The egg white in the iconic Tunnock’s teacake, as well as coconut-dusted “snowballs”, is specially imported from Oskaloosa Foods in America.

Caramel wafer biscuits are still wrapped in a traditional folded design even though this costs slightly more than current methods.

Famously, all of the company’s products are the same size that they were decades ago, even as rivals have succumbed to the scourge of “shrinkflation”.

This summer, rising raw material costs caused Nestlé to reduce the number of Kit Kats in its multipacks.

Yet recently, Tunnock’s has not been immune to such pressures. Prices for cocoa, the main ingredient in chocolate, have more than tripled since 2023 due to climate change and crop disease outbreaks in the world’s main West African growing region. Barry Callebaut, the world’s largest cocoa processor, in July cited “unprecedented market conditions” as it lowered its earnings outlook for the third time this year.

Loudon says that with cocoa butter by far the biggest single input, Tunnock’s had to raise prices last year along with its peers. He expects sales this year to be “flat” on last year’s £87 million. That is still not far off triple the £34m achieved in 2011 but, as Loudon concedes: “We have not been used to dips in sales.”

Now, with consumers still feeling the cost-of-living pinch, there are signs Tunnock’s is starting to adapt.

Cocoa price spikes were so dramatic last year that Loudon for the first time started checking London cocoa futures prices on a screen in his office. While the company previously bought stock in advance, such checks are helping Tunnock’s better judge when to lock in inventory at an acceptable price.

Last year, some advertising spend was shifted from TV, long the company’s preferred medium, to supermarket websites including Tesco Clubcard. Work is also underway to explore new export markets such as Brazil and India, where Tunnock’s sees particular potential since the South Asian country in July signed a landmark trade deal with the UK. Currently, about 20 per cent of the company’s production is exported. Half of that goes to the Middle East, where more of its coconut-covered caramel logs are sold in Kuwait than in the UK.

Arguably the biggest move the company could take would be to diversify from its mass-market products by adding new ones to profit from the premiumisation trend that has long driven higher industry margins.

Loudon says he “would love to do a white chocolate tea cake”, although adds the company doesn’t yet have the resources or the factory space. But he does reveal that Tunnock’s is “in the planning stage” of looking at entering the healthier snack market.

Meanwhile Boyd, now 92, is still active in the business, turning up at his office in the factory seven days a week. His third grandchild, Stuart, oversees maintenance after working as an aeronautical engineer at Rolls-Royce.

In May, the family re-arranged shareholdings as part of succession planning. A new era for Tunnock’s may be on the horizon.