F or more than 100 years Bulmers has been a household
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name as a cider manufacturer — but its UK distribution vehicles carry much more than cider.
HP Bulmer is the UK distributor for a range of drinks, including Perrier mineral water and Red Stripe beer.
It also manufactures and distributes other brands including Kini apple drink.
The primary fleet, 27 38-tonne tractor units and 68 trailers, is based at Hereford and distributes full loads to large customers such as brewers and supermarkets, and also to Bulmer's own network of regional depots.
As well as this it runs a 51-strong secondary fleet, comprising 17tonne and 14-tonne rigids. These vehicles distribute from depots at Gateshead, Manchester, Harlow and Basingstoke to a range of clients, from hotels to wholesalers.
About 20% of secondary distribution is managed by three other iepots, which are run by outside =tractors.
Traditionally, all of Bulmer's iehicles were outright purchases. 1 has a fully equipped workshop with a staff of 12 who maintain tIl of its primary fleet, part of its wcondary fleet and company cars. 3ut now things are changing. Last rear, after lengthy negotiations with several companies, divisional inance director Tony Hodder chose o sign up for 15 Volvos on operating ease with Volvo Truck Finance. The nine 38-tonne tractors and six rigids replaced ageing vehicles on Bulmer's primary and secondary fleets.
Bulmers decided that as more primary tractors came up for replacement they would be sold and replaced with vehicles on operating lease.
The company certainly has the buying power to buy outright, so why change its acquisition method?
Hodder explains that he had looked into the possibility of selling and leasing back his own fleet, but because residual values are so low at the moment this was not an economic proposition.
"I wanted to rid myself of the depreciation risk" he says. "Operating lease is the right way of doing this for the time being and we will continue to go down this path until some other method is more economically viable. "We are in the business of manufacturing cider, not running trucks."
"We have looked at leasing in previous years and rejected it," he adds. "But in recent times it has become more competitive and beneficial for our business."
Hodder was also encouraged to go for an operating lease rather than contract hire because they would still have responsibility for maintaining primary distribution vehicles at their own workshops and allow them the flexibility to make individual maintenance arrangements at their outlying depots. Operating lease also means that HP Bulmer is able to livery its vehicles.
"We are a marketing driven company and our livery advertises the brands we manufacture and distribute," says Hodder. "That is very important." A further eight trailers and eight rigids are currently being taken on operating lease from Volvo Truck Finance.
The truck acquisition and funding policy adopted by HP Bulmer is typical of a growing number of blue-chip companies who have clearly understood and calculated the benefits to their core business activities presented by operating leases. The key features of financial efficiency and operational flexibility heavily influenced their funding decisions.