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Highgrove Food Distribution - growing in the premium dairy market

Highgrove Food Distribution Ltd, the independently owned specialist dairy sales and marketing operation, supplies UK grocery multiples and independents with a broad portfolio of premium quality dairy products, spanning milk, milk shakes, butter, cream, yogurt and desserts. But it doesn't stop there. Highgrove's vision extends to linking adult and children's dairy products with character licenses and exploring food marketing opportunities beyond the dairy category, as Keith Collins, Highgrove Food Distribution's founder and Managing Director, explained to The Grocery Trader. The Grocery Trader - When did you first set up Highgrove? Having already spent thirty years in the food industry, with the last 25 in the dairy industry, I had become convinced that there was a need in the dairy sector for a specialist dairy operation that would look at new and innovative ways of marketing milk. The market was showing a dramatic change of emphasis, with consumers switching from door step delivery to supermarket purchase. The retail sector was declining as the multiples positioned milk virtually as a loss leader commodity purchase. GT - What was your background and experience? I left Anchor in 1992 with the purpose of creating an innovative sales and marketing operation that would best utilise my skills and network of EU contacts. With a background of marketing and NPD in blue chip companies like Heinz, St Ivel and Anchor, I was able to combine the practical and logistical issues with a clear understanding of how the power of the multiples was developing and to react to the opportunities and challenges that this would offer to the Dairy category. GT - Who else is with you now in your management team? What are their strengths? I was joined in 2000 by John Goodwin, our Commercial Director. He had spent the last 6 years as a commercial manager at Yeo Valley, and was a highly experienced operator in the dairy sector. Our Technical Director Mike Morgan joined the team in 2003 from Anchor, where he held a similar position and brought 25 years of world class expertise to our operation. Together with tight financial controls this makes up our current management team, giving us a combined expertise of over 80 years' experience in the food industry, and covers every facet from concept through to delivery. GT - Who owns Highgrove Foods now? Highgrove Food Distribution is a private limited company owned by myself. GT - Whereabouts are you based? How many people do you employ? Do you have factories, distribution centres etc anywhere else? Our Head office is in Wootton Bassett, in North Wiltshire and currently we have a staff of 10. Our distribution partner is Oaklands, near Redditch, with whom we have a very sound relationship. GT - You're located in Wiltshire, which is a major food-producing county. Do you have any formal links with other local food companies? Sadly, not a lot. Real innovation tends to come from Europe, but wherever possible we work with UK dairies. Obviously, all our Jersey and Guernsey dairy products come from the UK. GT - Where does the name Highgrove come from? Is there any connection with Prince Charles' Gloucestershire estate of the same name? There has been a Highgrove company operation since the 1980's. The company has since changed its name to Highgrove Food Distribution. Prince Charles's food business has always operated under the Duchy Originals brand name, so there is no business confusion, and it is in fact extremely rare that consumer confusion occurs. GT - How big is your annual turnover? How fast are you growing? Currently we are turning over circa £8m pa. Our present range is spot on for today's market. We are growing at +25% p.a. but the marketplace is fickle and changes in trends or personnel mean we constantly have to be on the look-out for new opportunities - sometimes outside the box. GT - What dairy products does your branded portfolio cover? My background is brands, and this is where we concentrate most of our efforts. Our current branded portfolio includes Gold Top and Breakfast Milk, unhomogenised and homogenized Channel Islands milk. We license these brands from Quality Milk Producers, a co-operative of Jersey and Guernsey breed farmers. Quite possibly these two milks were the first branded milks to gain national distribution. Since our launch six years ago we have extended the range to include premium Gold Top Butter, Cream and Clotted cream. Our dairy licensed brands are Noddy and Rosemary Conley. Noddy is organic yoghurt and Fromage Frais, stocked by the major multiples, and benefiting from double didgit growth due to Noddy's daily appearance on kids’ TV. We took Rosemary Conley into branded food two years ago, and have a hugely successful multi-million pound range of mousses. The only Highgrove branded product is Goose Fat, which we launched four years ago and is creating quite a seasonal niche for itself. GT - Which market sector do you fit into? We try with all our products to create a significant point of difference. Channel Island is the gold standard, so Gold Top is naturally the best quality and the highest price. Our Noddy desserts are organic. so that takes us away from the hurly burly of other non organic kid's products. Rosemary's mousses capitalize on her common sense diet regime, which allows sufficient fat and calories to deliver quality and taste. So I like to think we are delivering premium dairy products. GT - What's the difference between your 'Breakfast Milk' and other milk? Do you offer semi-skimmed and skimmed milks? Breakfast Milk is homogenized CI milk that delivers a 5% fat content, evenly distributed through the milk. It is perfect for porridge or cereal or as an alternative to cream in coffee. Gold Top is the only branded whole CI milk in national distribution that offers the added luxury of natural separation of the cream. This offers the consumer the opportunity either to use the cream separately or to mix it into the milk. The brand is also recommended by chefs as ideal for cooking sauces and desserts. We have previously trialed a semi-skimmed Gold Top product, but found our customers are looking for, and expect, the full taste of a whole milk. GT - Which ones are the biggest sellers? What's new for 2006? Both branded and own label Channel Islands liquid milk forms the cornerstone of our business. We are currently working on the repositioning and relaunch of Gold Top and Breakfast Milk and are working with MDC to support the CI producers going forward. In the yogurts and desserts sector, Rosemary Conley Chocolate Mousse and Noddy are our fastest selling products. Rosemary Conley Chocolate Mousse outsells all its main competitors where stocked and we are looking to extend listings. Sales of Noddy are showing consistent year on year growth. In 2006, we are planning to extend both ranges to increase the healthy dessert offering and provide a wider choice of organic children's dairy products. GT - How much do you spend above the line supporting your brands? What do you do in terms of consumer advertising and PR? When you work with classic brands, there is already a high level of customer awareness. We support our brands on a targeted basis: considerable budgets have been placed behind in-store support, and promotions and advertising of the Rosemary Conley brand within the RC slimming clubs and magazine, for example. We also pro-actively supporting our brands via PR in the trade and consumer media. GT - Do you supply own-label, and can you say for which retailers? What own label products do you offer? What proportion of your turnover is own label? Our customers are the biggest, and we respect their confidence. Suffice to say, we supply own label milk, butter and cream and also pro-biotic yoghurt drinks, milk shakes and mousses. It is inevitable that if we launch a successful branded product, own label will follow, and it is a compliment to our skills that we are asked to supply it. GT - What are the strategic benefits of supplying both branded and own-label products? As a company set up to respond to demand and opportunity, our policy is to be open to whatever market opportunity within the dairy sector is offered to us. Highgrove is geared towards fulfilling the demand from its customers and has a broad supplier base that can deliver a very wide range of products. GT - Do you handle your own supply chain, and deliver direct to the major retailers? Our supply chain partner is Oaklands near Redditch, whom we have worked with successfully for several years. We are both privately owned independent companies and have the same passion and culture for success. The route to end customers RDC's has to be flexible, with a balance between their requirements and financial efficiency. GT - Your company's full name is Highgrove Food Distribution. Do you offer third-party distribution services to other manufacturers? How does that work? Yes, Highgrove delivers to every major retailer 7 days a week, which allows us to offer distribution facilities on a third-party basis to others. Distribution is constantly consolidating and our network facility gives a route to market to others, big or small, at a fixed cost per case. GT - Do you see this part of your business (distribution) splitting away from the food marketing side as it grows, like Wincanton did from Unigate? Whatever happened to Unigate?! No, stick together; it's a joined up business. GT - You're involved in character licensing, for adults with Rosemary Conley and for kids with Noddy and Tessie Bear. What's the story there, and what products are there? Any plans to link up with any more characters? Do you offer character products in own label? I have always felt that licensed brands have allowed us to punch above our weight. With our research showing that consumers spend on average only seven seconds at the chilled dairy fixture, it has become imperative that packaging and consumer communication is extremely powerful at point of purchase. We initially approached Rosemary Conley with an innovative milk product, but it quickly became apparent that there was an opportunity to use Rosemary's endorsement across a whole range of healthy eating. With Noddy, we were keen to select a character that would tie in with the wholesome nature of a children's organic yoghurt. Not only is Noddy held in warm regard by parents who grew up with the brand, the fact that Noddy is on TV five days a week gives him a brand new following in the pre-school age group GT - How important is innovation in the dairy sector? What's driving your developments in this area? Food is the biggest fashion business around. It is constantly evolving, and the dairy sector in particular is a hotbed for new product development. It even warrants its own trade magazine, Dairy Innovation. The major multiples, particularly, are looking to stay at the forefront of dairy technology, particularly on functional lines. To facilitate these we have forged close links with innovative dairy manufacturers. Unfortunately most innovation comes from across Europe, which is why we spend so much time travelling and visiting exhibitions so we can spot, interpret and fulfill trends. GT - Have recent concerns about health and obesity had any adverse effect on your sales? How are you responding? Perceived fat content in the premium CI dairy sector is definitely a challenge, but one which presents opportunities. In terms of our luxury dairy products like Gold Top and Breakfast Milk, we are working hard to raise awareness of the product delivery, usage and nutritional benefits, at the same time explaining that contrary to perception the product naturally only contains 5% fat. With retailers facing pressure to cut the levels of fat, salt and sugar across all of categories, we see this as an opportunity to grow the Noddy and Rosemary Conley ranges. GT - Beyond the dairy category, you recently launched Highgrove Goose Fat. What was the idea there? Where does it fit into your portfolio and who is it aimed at? Which outlets is it sold in? Goose Fat is a product that has been hugely successful for us. We initially secured a deal with one of the multiples, by being the only contact on their supplier base to be able to source and supply a jarred goose fat. Further to that, we have been able to supply and distribute Goose Fat to a large number of convenience stores, delis and butchers, nationwide. After a near sell-out period in December 2005, we are now supplying a large number of our customers on a year-round basis. GT - Any plans for more non-dairy products? We are constantly on the look out for new brands and clients that will add to our product offering and increase the level of service we can give our clients. GT - How do you work with retailers to develop the dairy category? What are the benefits of working with you, as opposed to other suppliers? Our philosophy in dealing with all of our accounts, however large or small, is to offer creative solutions that will help drive sales in the dairy category. As well as a commitment to NPD and innovation, we pride ourselves with a "Can Do" attitude to respond to a challenge, as in the case of Highgrove Goose Fat. It is this reliability and service that keeps our business moving forward. GT - In our era of everyday low prices and downward price pressure, what is the role of premium milks like Gold Top and Breakfast milk in the dairy market? Where do they fit into the multiples' offering - what's the proposition for stocking them? Despite the ever-increasing pressure on price, it is important for the dairy sector to continue to offer choice and quality, which means marketing premium milk products in a way that is attractive to our consumers. Premium milks are an important quality-proposition for the multiples, who are placing increasing importance on the 'fresh' offering. GT - Where do you see the dairy category going from here? There is huge potential for growth in the dairy category, to satisfy its wide and varied consumer base. Organic dairy products will mainstream and become more accessible to the mass-market; local and UK sourcing will be of key-importance. We have already seen the growth of digestive-health products such as pro-biotics, which will extend across the category i.e. children's dairy products. There will also be further growth in branded organic and small-scale produced dairy products as consumers look for 'local market-style' offerings in the multiples. With our breadth of experience, and "Can Do" attitude, the opportunities for us are endless. GT - What do you see as the biggest challenges in the dairy category, and how should producers and retailers tackle them? The main challenges are price wars; the need for innovation in a crowded chiller section; the sector being devalued by constant promotion; reduced shelf space as multiples make more space for non food; and negative media activity. GT - You've been running the company now for 15 years. What are your ambitions for the business going forward? Profitable growth and enjoyable and meaningful employment for the team. GT - Finally, where do you see Highgrove Food Distribution going from here? If I told you, I would have to shoot you! It's a competitive world, full of opportunities. We have to understand our strengths and our limitations; do better what we're doing now, and bolt on more business for the next 15 years and beyond.