ROBERT Graham doesn’t get out to inspect his cows as often as he would like, but he still finds that a walk on the family farm puts him in a relaxed frame of mind for the day’s business, writes Dominic Jeff.
It’s the same farm he used to play on as a child, but now it’s also the headquarters of a food brand turning over more than £1 million a week.
Graham’s The Family Dairy today publishes figures showing that sales increased 21 per cent to £68m in the past financial year. Pre-tax profits more than doubled, to just over £1m, although Graham worries that is still not enough to justify his capital expenditure.
Since he became the third Robert Graham to run the business, in 1996, he has diversified from milk into butter, cheese and ice cream. And, more recently, he has been building the brand, which trades strongly on its rural grounding in Bridge of Allan. The group recently ran its first TV adverts, which featured three generations of the family on the dairy farm together.
Graham says that the business has made a conscious decision to stay close to its roots. “We are a farming family,” he says. “We feel that our farming values are very important in terms of how we run our family business.
“The business doesn’t feel that different to me than it did ten years ago. We worked very hard to make sure we keep that feel. That’s how we are with people working for us, how we communicate with our customers and how we deal with our farmer suppliers. We like it to be personable.”
And it makes sense to push the family connection in the brand, Graham says, as it shows a personal connection and accountability for the product.
“Our name is on the product, on the lorries – we take things very personally,” he insists.
The farming connection has also given Graham and his family a keen work ethic. It has always been a 24-hour business. “Every day of the year, every our of the day we have a lorry moving somewhere – even Christmas Day,” Graham says.
“I remember as a kid that our customers whose shops were open would come to our house on Christmas Day and say, ‘Could you open the fridge and get us more milk’ because they had run out. And we wouldn’t think twice about doing that. That’s how I grew up and how we ran our business.”
It is hardly surprising that Graham and his sister – who is in charge of marketing and was behind the firm’s 2006 re-brand – have been working hard to build up the business. In sales terms, the company has grown at about 20 per cent a year for the past 15 years.
Branching out from milk has given the firm more options. Butter production started in 2005 and now accounts for 11 per cent of the group’s sales.
The next stage of expansion is already on the horizon, with plans to branch out into cottage cheese and yoghurt from a site at Nairn in the Highlands thanks to a food marketing grant of almost £500,000 from the Scottish Government. With the firm ploughing more money into advertising and planning to add products to its range, the growth has continued into the current financial year.
The TV advertising campaign in August coincided with the firm’s biggest month of sales ever. The campaign cost a six-figure sum but is likely to be repeated next year, and Graham says there may be scope for some UK-wide advertising of the “Gold” range of products, which has a full UK listing with some large retailers.
Graham is concerned that the company is still facing tough conditions due to the increased cost of raw materials. But with a farmer’s instinct for keeping an eye on his competitors, Graham says the firm appears to have weathered the problems better than its rivals.
“We try and keep an eye on what they are doing, but it’s what we do that’s important,” he says.
The firm’s latest figures are a big improvement on the year before, but Graham is still keen to secure better profits.
“We’ve been very much focused on growth,” he says. “I think we will continue to do that but also focus on our margins more.”
The group has been investing about £2m a year in capital expenditure on average, and at those levels Graham says the pre-tax returns need to improve.
“I would still like to see us having grown our business by 50 per cent again over the next six or seven years,” he adds.
With the popularity of British produce riding high in many international markets, exporting would seem like a natural target. The firm’s branding seems made for an international audience already hooked on tweed and shortbread, Graham is cautious.
“We now have more products that we could export,” he says. “Some of the products that I would like to launch in butter would be more applicable as well. But I strongly feel that, like in football and rugby, you have to win your home games, and there are a lot of opportunities in Scotland, let alone in England, for Scottish dairy products.”
And the fact is, the firm is still enjoying sales growth in Scotland. Graham says: “There are a lot of products on Scottish shelves that are not Scottish and not British; I think we have a good chance competing against them.”