We have to start with Brexit don’t we. What’s your position on the debate? I’m in favour of staying in the EU. I’m not a Europhile and I don’t think the EU is perfect by any means, but on balance my job in business is about managing risk and there is too much risk in a Brexit.

We also haven’t seen any sort of manifesto from the out guys, and I’m worried we’re going to sleepwalk into a Brexit with no contingency plan. The one thing farmers and the food sector might be able to look forward to in the event of an out vote is a brief period when the pound weakens and exports might improve for a bit. But the food and drink sector can’t run without migrant labour. I wish there was a louder voice from food and drink and from retail and I get a bit depressed the FDF is still undecided.

How good a job do you think AHDB is doing around promoting dairy? It’s doing a good job with the budget it has, but I don’t think a generic campaign calling on consumers to drink more milk because it’s healthy for them will cure the ills of the global market. Any campaign to promote milk will need to leave a legacy, and I would say let’s put money behind Red Tractor, and get out there at the grass roots. If we are to make it a truly household name with values shoppers understand it’s going to need more money.

You launched an export brand last year. Did being part of the EU help and how’s it going? Yes. Being part of the EU has helped us export in as much as it made the route to market easier. For instance with Lidl, we supplied them in the UK and then it was taken by them into stores across the EU. That was an example of a proper free market. When you initially start exporting there are a number of complications and additional costs, but in that circumstance it was simple.

The export business is going well. In the EU we’ve obviously had some currency issues but volumes are looking good, and we had some particularly good months last autumn when we picked up national listings in the US with the likes of Wal-Mart, Sam’s Club and Publix. There is a real interest in the US for UK foods and retailers also want to see our environmental credentials on front of pack, such as our hormone-free declarations.

What about the challenges you faced, particularly in getting into China? We’ve been doing a bit into Hong Kong and China but it’s going to be a slow burn. It’s very regionalised out there, and dairy is not a big deal in China at the moment. We deal with 160 countries now, with between 30%-35% of our business coming from exports last year which we were really pleased with. It has the potential to go to 50% of our volume in the next couple of years, with places like France doing particularly well - our Carrefour listings are up 20% year-on-year. We’re also launching a cheese in France called ‘Le Welsh’. It’s a Cheddar made specifically for the French take on Welsh rarebit, which was taken over to France by Wellington’s troops and is still very popular over there.

Are there any other markets you are targeting? We have orders from places like Mexico and Brazil but we are struggling with setting up trading protocols. Exporting is so complex, it has massive potential for the business but it takes time. Upfront investment in export is massive and we need to see some cash from the government if we are to fulfil our export potential. We have spent millions to get export markets set up. Initially when we started in France there was funding for tastings at grass roots level to build sales and if the government is really serious about getting the Chinese and Indian markets going we need the budget to put people into stores. If we’re serious about fast tracking that process that’s the sort of thing we need money for.

You’ve recently cut your milk price again - what’s your message to farmers in the current climate? It’s tough, the EU is oversupplied, and there’s a lot of Cheddar coming over from Ireland. The foodservice sector is particularly difficult and there are a lot of promotions among retailers, which are making things even tougher, and this will be the case until after the spring. We’re getting to the point now where some milk probably won’t even be processed this year, and instead chucked down the drain for the first time since quotas began.

I can see lots of farmers milking through the summer as it will essentially be free to feed cows on grass, but then many will get rid of their cows because they can’t afford the feed in the winter. We have to tell that story graphically and stop aggressive buyers from slamming producers in the spring months when milk is at its cheapest, because in the autumn they might not have any British product. We have to save the retailers and foodservice from themselves. On our milk price, we’re trying to push more product into exports. Commodity markets are appalling so it’s about trying to manage the business as responsibly as we can. We’re asking farmers to manage their cashflows, and get good financial advice rather than bury their heads because those problems are not going to go away.

How has the dairy crisis affected your business? We had a tough financial year last year due to the depressed market for cheese. It’s not easy being a long-aged cheesemaker in a falling market.

The price of oil is already going up again. Can you envisage an improvement in milk prices over the next six months? They say a market recovers when the last man loses hope and pretty much everyone I know has lost hope.

With Alpro now the second largest dairy drinks brand in the UK what are your thoughts on the rise of dairy-free products? I don’t see them as a threat at all. Part of our strategy is to grow consumption of cheese. Consumption is still incredibly low compared with other countries so there is an opportunity for cheese to be at the centre of meal occasions and that’s what we’re working on over the next year with our new Cheese for Tea campaign, which will offer consumers recipes and ideas for using cheese as the meal centre solution instead of meat.

How do you view Amazon? Are your products available on Amazon yet? We haven’t had any direct discussions with Amazon, but we would certainly like to. They are the Tesco of online. I like the Amazon Prime model and I think they will be a strong challenger - they are already an everyday part of people’s lives.

You have invested a lot in your green credentials in the past few years. What tangible effect has this had on sales? What more can you do? I think they do have a tangible effect, especially given we have come through one of the toughest periods of rationalisation in the industry and picked up listings rather than losing them. That point of difference in this tough market is more important than ever, and I believe green issues will be the strongest driver for purchase in the next 10 years.

We are approaching an energy crisis in the next five to six years and it seems the government is making up their strategy as they go along. I think businesses without their own energy solution will be at a disadvantage in the future.

As an environmentalist I also worry about temperature increases, and the effect they will have on food production and I’m surprised there isn’t a stronger environmental lobby within grocery. Retailers are now risk-assessing all their suppliers against their climate change resilience yet we’re not getting a strong enough voice from government on environmental issues.

With more of the retailers moving from back margin to front margin do you feel suppliers are at risk of losing control of their promotional investment? I don’t think so. I think it should breed a bit more trust and hopefully a bit more transparency. We have tried to operate on a different path to our competitors. We’ve always campaigned to get an EDLP type price and sell from shelf while building a loyal shopper base that knows we won’t be the cheapest, but if they enjoy the product they can come back and have a known-price product. I don’t believe in a high-low strategy with a high baseline price as it punishes your loyal shoppers. But it was previously very difficult for independent businesses to challenge properly because back margin deals precluded a lot of medium turnover businesses from being able to invest lump sums, so moving to front margin deals should foster a more competitive environment, more choice and innovation.

What effect will the government’s national living wage have on the food sector? It will drive robotics and mechanisation because suppliers won’t be able to afford the labour. With low interest rates it’s cheaper to borrow money to install automation than pay for people and it makes you wonder what people who aren’t technically minded will be able to do for a living. Ultimately it could also drive price inflation, particularly for growers. As a business we have already invested a lot in automation with technology such as pick and place robots, pallet stacking machinery and automatic cheese packing. We had to do that partly because of manual handling regulations and have increasingly had to engineer manual handling jobs out of the business.

Topics