Interview: Dairy boss Robert Graham to tap into protein ‘super trend’ after riding out tough year

Third-generation family business eyeing 2024 with optimism as inflationary pressures ease.

Robert Graham is a name you may not instantly recognise but his face could well be staring out at you every time you do the daily or weekly shop. The Graham’s The Family Dairy managing director, his father, also called Robert, and several of the firm’s milking herd feature large on the exterior of hundreds of supermarkets and delivery trucks.

Founded in 1939 by the present MD’s grandfather, yet another Robert, the Bridge of Allan-based business has grown into one of Scotland’s most familiar and successful Scottish food brands, with annual sales now in excess of £150 million. It also ranks as a major export success story - with almost half of its business coming from beyond these shores.

That’s not to say it has all been plain sailing, with the past three or four years, in particular, throwing up a myriad of challenges for the third-generation family-run business, the dairy industry and, indeed, the wider food sector. Besides the disruptive role played by the global pandemic, which is still impacting demand for milk-related products - fewer office workers means fewer trips to the coffee shop - the past couple of years have seen nearly every company, and individual, battle the depressing effects of inflation. Those pressures led to Graham’s racking up a £1.3m loss before tax in the year to the end of March 2023 - the first deficit on that measure in its history. That shortfall came despite a healthy hike in annual sales.

Dr Robert Graham with his son Robert Graham, managing director, and some of Graham's The Family Dairy's products. Picture: Gibson Digital / Graham's The Family Dairy

The firm’s MD concedes that the last year was “horrendous” but he refuses to batten down the hatches and is looking to a 2024 that should see fresh investment result in further gains in sales and market share.

“Last year was tough,” he says. “It was everything from the milk price to energy costs and packaging, plus supply chain pressures and labour availability. We were behind the curve in getting prices up to our customers. It was a hard year and it felt that the ground beneath your feet was changing all the time.

“Given that we are a family business that’s been around since 1939, we have seen a lot of stuff before so I think that provides an in-built resistance. You have to know what you are doing product wise and customer service wise. That has stood us in good stead as the whole cost inflation landscape has started to calm down.”

It may be a traditional business by its very nature but Graham’s has never been afraid to embrace change - it was one of the first of its kind to make the wholesale shift from pony and cart to delivery van. Of late, new product development and diversification have been at the fore.

Robert Graham, MD of Bridge of Allan-headquartered Graham’s The Family Dairy. Picture: Gibson Digital /Grahams The Family Dairy

At the end of November it emerged that for the first time on record, the firm had seen sales of protein and Skyr products overtake sales of conventional milk in major supermarkets. Protein sales, which now equate to about a quarter of business, saw a 67 per cent growth over the last year. As a UK product sector, protein dairy is now worth upwards of £500m in sales and animal protein has been one of the top-five growth trends since 2019.

“Right across our range sales have been strong but anything protein related has been doing very well,” notes Graham “junior”. “We don’t believe in using sweeteners and we avoid using them in our yoghurts. Dairy protein is a ‘super trend’ and we are making products that customers want - based around natural authenticity, provenance and great taste.

“We are competing with a lot of products that are made outwith Scotland and the UK. It has been a challenge meeting customer demand, though that’s probably a good problem to have.”

While most of the trading being done outside of Scotland is chiefly in England and Ireland, the company has more recently been building a brand presence in Dubai. Graham describes the move as “really exciting” and says the firm is on a “level playing field” with its competitors as almost everything imported has to be flown there. Alongside its protein product success, the group has seen sales of its traditional gold top milk rise 13 per cent, year on year, in the last four months.

One notable bone of contention in the company’s recent history has been its ambitious plans to build hundreds of homes on Airthrey Kerse between Bridge of Allan and Stirling. It wants to use money made from the housing development, which includes plans for a new primary school and public park, to fund a new dairy plant at Craigforth. There has been a succession of planning decisions and appeals, with a rejection from Scottish ministers declared at the end of 2022.

“It’s frustrating as it is something that would have produced a huge amount of economic benefit and allowed a step change in terms of the dairy,” says Graham. “It ticks a lot of boxes. Every council is facing a housing shortage. However, as a business we’ve got to work with what’s in our control and these are things that we can cycle back to at some point and we continue to invest in the business. We have certainly invested significantly in the protein side of the business in the last 18 months.

“We are optimistic heading into the new year and have been optimistic since the spring,” he adds. “We make some great natural products that customers are wanting.”