Interview: Martyn Gray, new boss at Nairn’s

MARTYN Gray has taken the biscuit. Or he will in June when he takes over as managing director of Nairn’s, the Scottish manufacturer of all things made with oats, writes Erikka Askeland.

The former Scottish & Newcastle (S&N) executive will take the helm of the iconic Edinburgh firm from the Honourable Mark Laing, who belongs to a sort of biscuit aristocracy – he is the son of Hector, Baron Laing of Dunphail, who was chairman and life-long president of the snacks giant United Biscuits.

Laing, whose family will continue to own 55 per cent of Nairn’s, will stay on as chairman and keep a watchful eye on the business. But you get the sense that Gray, who has been involved with the business for two-and-a-half years, already has a few ideas in mind.

As marketing director, Gray has led much of the effort to develop new products. One such is the Oat Cracker Thins – a wheat-free cracker that appeals to people who may not like traditional oatcakes.

Gray says: “We are hoping that some consumers who are not tempted by oatcakes will be tempted by oat crackers.

“That’s three new lines we put out this year. Our plan for 2013-14 is we will have three or four new lines coming out as well. You need that pipeline of new ideas. But you also have to look at your existing products and see if they are still as good as we think they are.”

A strong focus for the business is the growing gluten-free market. Oats are naturally free of gluten, a protein found in wheat as well as other grains such as rye and barley. The ingredient is credited for making items such as pizza crusts doughy and moreish, and is also used by the food industry to thicken soups and sauces. However, there is a growing number of people who are avoiding in their diets due to gluten intolerance.

Some have dismissed it as a celebrity fad, with gluten-free diets reportedly embraced by the likes of Victoria Beckham and Gwyneth Paltrow in an effort to stay slim. But there are growing numbers of people avoiding the substance. Symptoms of gluten intolerance include feeling bloated after eating it, and digestive problems. They are similar – if milder – symptoms to the much more serious coeliac disease, an autoimmune condition which also leads to inflammation which can cause intestinal cancers, as well as complications such as infertility and osteoporosis.

But as Nairn’s has found, merely using oats as a basis for gluten-free foods is not enough to meet the strict criteria for coeliacs and others who are gluten intolerant. Gray refers to the “magic 20 parts per million” – the trace amount of gluten that can be allowed into raw ingredients. Contamination is a risk if wheat has been grown close to a gluten-free crop, or the same machinery used to harvest it. In order to achieve the cross-grain symbol awarded to foodmakers by coeliac organisations worldwide, including Coeliac UK, Nairn’s had to source oats from a farmer in the US – who is also a coeliac.

For Gray, the company’s export markets, particularly in North America, are proving to show a taste for Nairn’s growing range of gluten-free biscuits, crackers and porridge pots.

“The market is developing quickly,” he says. “We had a three-year target where we thought the business would be and we have already hit that target after two years.”

Gray, a Geordie, is not the only former S&N director who has traded beer for more healthy products. John Dunsmore, chief executive of S&N when it completed its £7.8 billion sale to Carlsberg and Heineken, recently joined the board of another coelic favourite brand based in Edinburgh, ­gluten-free bread maker Genius Foods.

Gray won’t be drawn on whether he has met his old boss to discuss gluten- free strategy. But he does hint that he has acquisition ambitions.

After Laing and his partners bought Nairn’s 17 years ago, growth has been steady and organic. Laing told The Scotsman the board had considered a few potential buyouts, but so far they have resisted.

Gray says: “The business has been successful over the last 17 years in terms of that organic and sustained growth. That is something we hope to continue. But if I’m honest, what we will do is put a plan together for the next three or four years. I am just working on it now.

“We’d like to present some interesting ideas to the board, to see if they see an opportunity beyond organic growth. The key for me is getting the strategic plan right for the business so there are no big surprises., and everybody understands our plans for the future.

“We’ve got exciting plans, new products, as well as managing and controlling the business. But if there was an opportunity … the shareholders would look at it.”

Another potential growth plan is the possibility of setting up a gluten-free factory in the US in the next few years.

“Gluten-free is an obvious one,” says Gray. “We are bringing the oats from America. We would have to establish the product first to ensure the traction in the market. It is something we will look at.”

Although economic conditions have been challenging for most companies relying on consumers, Nairn’s saw turnover for the year to the end of June 2012 increase 9.6 per cent to £17.5 million, while operating profit rose 5.3 per cent. This was despite being stuck between food price inflation and the pressure of supermarkets to keep prices down.

Gray also realises he has to “watch every penny”. He says: “Prices in supermarkets are not reflecting commodity prices. Somewhere there is a disconnect and somebody is losing out in the supply chain. You have to look at the cost base you are operating in. You have to look at whether you are spending your money wisely.”

But he still sounds bullish about the future of Nairn’s. “With fear of recession, consumer confidence is at an all-time low. But it is a more than a steady performance to carry on growing the business and bottom line like this. Not many firms are doing that.”

30-SECOND CV

Born: Newcastle-upon-Tyne

Education: St Cuthbert’s Grammar School, University of Northumbria

First job: Proctor & Gamble

Ambition while at school:

To play for Newcastle United

Car you drive: Alfa

Kindle or book? Book

Can’t live without: My BlackBerry

Favourite place: New York

Favourite oat snack: Nairn’s cheese oatcakes

Best thing about your job: Bringing new products to the market and seeing consumers enjoy them