The Publication For The Grocery Trade

Yeo Valley Organic, Britain's leading organic dairy brand

Organic produce is the UK's fastest growing grocery market, and Yeo Valley Organic has established itself as the sector's leading branded supplier. It has produced yogurt since 1974, and started marketing organic yogurt in 1993. Today its first such product, Yeo Valley Organic Natural Yogurt, is Britain's biggest selling natural yogurt. But that's not all - the Yeo Valley Organic brand now appears on a growing family of widely stocked quality organic dairy products, including children's yogurts, milk, cream, butter and crème fraiche. Ben Cull, the Yeo Valley Organic Company's Marketing Director, spoke to The Grocery Trader. The Grocery Trader - First of all, just how organic are Yeo Valley Organic products? They are all organic, certified by the Soil Association against strict criteria. GT - When was Yeo Valley set up, and who owns it now? Yeo Valley is a privately owned company, run by Tim Mead, son of the founders. It’s been involved in farming and food production for 35 years. Yeo Valley Organic has been going just over ten years. GT - How big is Yeo Valley Organic in turnover, staff and operating locations? Yeo Valley Organic’s retail turnover is £60 million, 40% of the total Yeo Valley business. The rest is own-label conventional dairy products. GT - Is there a real place called Yeo Valley? Yeo Valley’s dairy and farms are situated in Somerset, on the side of Blagdon Lake. The area is known locally as Yeo Valley; the river Yeo flows into the lake, which was created in Victorian times as a reservoir for the city of Bristol. You won't find Yeo Valley mentioned on maps, but we've made it somewhere people know about, renowned for excellence in products and service. Given our heritage and setting, not surprisingly we see ourselves more as farmers than manufacturers. GT - Looking at the overall category, how big is the UK organic dairy market, and how fast is it growing? The UK organic yogurt market is worth £73 million, growing 16% annually. GT - What value share do you have? Some 80% of Yeo Valley Organic’s retail sales are yogurt, so we have two thirds, worth £48 million, of the organic yogurt market. YVO continually outperforms conventional yogurt for growth. GT - Do you sell to other countries? Yeo Valley Organic’s products are sold through retail outlets in the UK and Ireland, but the major UK retailers’ European branches also stock them. GT - What proportion of the UK dairy market is organic? Organic dairy is principally milk, yogurt, cream and butter, representing on average 4% of sales in these categories. Organic dairy as we define it is growing 18% annually in value. GT - How much further can it grow? People tell me 60% of baby food is organic now, so for dairy the sky’s the limit! The total organic food market is now worth over £1 billion. GT - How do organic dairy prices differ from normal products? Organic food products cost more to produce because of lower yields and higher costs, but as a marketing exercise we’ve taken a cut in the middle and pay our producers a fair price. Hence, our price differential over conventional dairy is typically 10p more for a large pot of yogurt, which is lower than others. We’re doing this to encourage market growth and stimulate other brands to enter, and most importantly, attract consumers to purchase. GT - How do organic dairy products' shelf lives differ? I can’t speak for anyone else, but our organic products’ shelf lives are no different from conventional dairy products. GT - Are there sufficient UK organic dairy farmers to meet demand? Yes there is, but with some slight surplus. We have always worked closely with the Organic Milk Suppliers Co-operative (OMSCo) since its formation; today they have over 300 member farms, of which we rely on some 80 here in the South West for regular milk supplies, giving us a solid supply chain. We have long-term, sustainable relationships with them and trade fairly. Supporting British farming’s sustainability is a major part of our ethos. GT - Do you work with farmers to help them convert to organic status? Not directly, but as our business grows, we will get even more milk from OMSCo, which will draw more farmers into going organic. GT - Do you get involved with wildlife conservation and similar activities? We do quite a bit, unlike typical dairy manufacturers. We’re based in an area of natural beauty; we build dry stone walls; we set aside land and encourage wildlife to thrive; wherever possible, we maintain good bio-diversity. We have our own farming and conservation teams; our farms are among the best invested in the South West, including in conservation. GT - What are the UK consumer demographics for organic dairy - is it skewed to Southern, upmarket, or is it universal? There used to be a Southern, upmarket bias; there’s still a slight South/Southwest skew, due to the supermarkets’ profiles. If you take our organic dairy products overall, consumption is universal but heavier with singles and couples, young families, empty nesters and retireds. GT - Why do you think you’ve been so successful? It's down to product quality – the way we make them and the ingredients we use. GT - What’s in the 2005 Yeo Valley Organic product range? We offer natural, fruited, children’s and Greek yogurt; low fat, fat free and whole milk; cheddar and regional cheeses; and in frozen we market vanilla ice cream and frozen yogurt, which is also low in fat. We’re well represented across our range in most retail channels. GT - What pack sizes are there? We sell milk in cartons. We pack yogurt in portion packs, cluster packs and big pots. Cream we produce in pourable pot sizes. Our cheddar comes in fixed weight 320g packs and the territorial cheeses are in varying weight packs. GT - What are your latest launches? How are they doing? Some of our newest products are our milk and cheeses, launched last July, and our frozen yogurt and ice cream, introduced in March. In terms of children’s products, we launched a new range of yogurts, Fruit Tumble and Strawberry Jumble, in October last year. Milk sales are on track to hit three million litres in year one. Our frozen products are in Sainsbury’s and Waitrose, and doing very well. Our 1 litre vanilla ice cream is very competitively priced at £2.99, a premium product for every day enjoyment. GT - What awards have your products won? We’ve won various awards over the years. The list includes local cheese awards; the Soil Association’s Food & Drink awards last September, for our milk and yogurt; and the Queen’s award for sustainability in 2001, for the way we handle the supply chain. The most recent award we have won is Best Advertising/Marketing campaign in the annual Natural and Organic Products Awards. Yeo Valley Organic and the rest of our business work to the same ethos - people say it’s a refreshing change to deal with us. GT - Do the food regulations concerning organic products differ from those for mainstream dairy? The standard EU food regulations don’t differ for organic products, but all of our recipes and product launches are Soil Association-accredited. It’s more rigorous for us, but offers a guarantee and safety factor for the consumer. GT - What effect - if any - have recent concerns over health and obesity had on organic dairy sales? It’s too early to say overall, but sales of our children’s yogurts have certainly been positively affected. Before we relaunched last September, they were up 18% year on year, with further growth since then. Once the story broke about organic milk having higher levels of Omega-3, as indicated in Newcastle University’s research, organic milk sales generally have gone through the roof. The recent Sudan-1 scare increased organic sales too, as organic products, by definition, cannot contain artificial ingredients or colourings. GT - How does organic dairy fit in with the quest for lower cholesterol levels? Very well! For people concerned about their fat levels, we offer low fat and fat free yogurt, crème fraiche and a range of low fat compotes. GT - What percentage of your milk and other products are sold via doorstep deliveries? The vast majority of our milk and other products are sold through retail. Our only doorstep delivery is through wholesalers. We’d like to sell more milk and other organic dairy products through all possible channels, but you’ve got to start somewhere! GT - In what UK areas are your regional cheeses produced? Our Cheddar is made here. Our farmland stretches over the Cheddar Gorge. Our territorial cheeses are sourced from different regions. GT - Are organic cheese sales growing? Again, it’s too early to tell. The UK organic cheese market is pretty small right now – we’ve become a destination for quality products for consumers to purchase, where previously there was no organic cheese whatsoever. GT - We could have a whole interview about this, I'm sure, but is the organic cheesemaking process any different to 'normal' cheesemaking? No. We make all our cheeses through an accredited West-Country Farmhouse process - in an open vat, turned, drained and cut. The only difference to other farmhouse cheeses is the organic aspect. GT - Your web site's children's and schools sections are inspired! What else are you doing in consumer education about the merits of organic dairy? We supported our Children’s yogurt launch with entertainment and information on the packaging. Our web site is key – we provide manufacturing and organic information there. We’re also liaising with local schools in Bridgwater on an education programme. We’d like to partner with other suppliers to sell organic products to schools at fair prices, and also get the message across about where these products come from. GT - What consumer advertising and promotion do you do? Last year we spent £1 million, our most yet, on an umbrella campaign of posters, press and bus sides. This year we’re doing magazine work, and planning another children’s campaign in September, when the schools go back. GT - On the merchandising front, do you think organic dairy should be presented as a separate category? It’s ultimately up to the retailer. Most UK supermarkets, with one major exception, merchandise it with conventional products in the main dairy section, and we’re happy with that. GT - How can UK supermarkets capitalise on consumer interest in organic dairy? It’s about making the most of the interest in-store, using the old favourite techniques – better merchandising, range and stocking. In the last few years they’ve been doing it pretty well. GT - How do you work with retailers to promote sales? Each retailer has their own strategy, and our national account teams tailor their plans to each one’s objectives. EDLP does nothing for organic dairy sales – consumers question its validity and are put off buying if it’s too cheap GT - What external factors do you see affecting your business and the UK organic dairy market overall, looking ahead? The main factors are changes in retailer ownership, food scares, even greater awareness of what people consume, and increased scrutiny of food. Other dairy manufacturers have tried offering organic varieties and then shied away, either because of the unexpected cost or their lack of credibility. We have a unique credential in this market, and we’re here to stay. GT - So where do you see Yeo Valley Organic going from here? I’d love to see greater growth in our core business, yogurt. We’ve gone into four new categories – milk, cheese, children’s yogurts and frozen products, and we will continue to be successful. GT - You’ve done pretty well so far. What are your next goals? My personal goal is for Yeo Valley Organic to be in the Checkout Top 100 brands. I’d also like to see greater sales of organic milk generally, more organic farms, increased sustainability of the market and more awareness of what we’ve done for farming. There’s a lot more work to do to achieve all that! Yeo Valley Organic 01761 462798 Web: www.yeo-organic.co.uk Email: talk@yeo-organic.co.uk