Scotland’s favourite dairy brand today announces solid full year results to March 2016, and looks to an exciting year ahead with new products set to launch and further overseas expansion in their sights.
The family-owned farming business, based in the heart of Scotland since 1939, has signed significant deals in this period, acquired a new site in Fife, invested in production capabilities and successfully expanded its product range, as well as being named number 1 Scottish dairy brand.*
Graham’s commitment to quality and innovation has led to more than half of Scotland’s population buying Graham’s products. However, the global milk market has shown a great deal of instability and 2015 was a particularly challenging year in terms of milk volumes, with farmers producing more milk than the market could comfortably consume. The oversupply led to significant balancing costs for Graham’s and deflation in the market. During this period, Graham’s continued to pay its farmers the highest price in Scotland, and with the market showing signs of recovery in the second part of 2016, Graham’s has increased its price to farmers in recent months.
Trading against this challenging backdrop, Graham’s sales are down year-on year to £83.6m (£86.5m), principally driven by deflation despite volume wins during this period. Profit before tax is also down slightly to £1.43m (£1.5m**).
There was continued investment in plant and machinery representing a capex investment of £1.4m. New Product Development is a key part of Graham’s growth strategy and the purchase of Glenfield Dairy in November 2015 saw the business extend their award winning product offering to include quark, cottage cheese and sour cream – all of which have achieved multiple UK listings.
Graham’s entered the quark market at an exciting time of growth for the product and are pleased that their quark, made with the freshest Scottish ingredients, is now the leading quark brand in the UK. Investment during this time also included significant spend at the Nairn dairy, from which Graham’s launched a new range of yogurts in September 2015. The dairy also relaunched their ice-cream in March 2015 with distinctive packaging and a nostalgic advertising campaign, which saw sales rise by 66%.
Two significant partnerships were secured in 2015. In February, Graham’s became exclusive milk and whipping cream supplier to all 68 Starbucks stores across Scotland. And in March, Graham’s signed a seven figure deal with one of Scotland’s leading food suppliers, Brakes Scotland, to provide their award-winning milk, butter, cream, cheese, yogurt, cottage cheese and crème fraiche to all of its customers across Scotland.
Graham’s successfully achieved their ambition of becoming dairy brand of choice by bringing the Graham’s story to life with an investment in marketing, reinforcing their core values of farming, family, heritage, quality, provenance and taste to connect powerfully with consumers. Graham’s have not only maintained their position of number one Scottish dairy brand, they have recently been named number one overall Scottish food brand.*
Robert Graham, Managing Director of Graham’s The Family Dairy, said: “We are pleased to have delivered a solid performance during what has been an incredibly challenging time for the entire dairy industry. As farmers ourselves who continue to milk our own cows, we understand the pressures farmers face and this why we continue to pay them the highest price in Scotland. We truly value the relationships we have with our 100 farming partners and are committed to continuing an open and regular dialogue to the benefit of all of our businesses going forward.
“We’re a family business at heart and our core values of farming, family, quality, heritage and provenance always ring true. At Graham’s we never stand still, we’re always innovating and have exciting plans for future growth, including new product development, ambitious plans to develop a new dairy processing plant in Stirling, and further expansion of the brand overseas.”
*Research by Kantar International WorldPanel.
**Profit before tax for FY to March 2015 is restated due to adoption of auditing standard FRS102. Originally reported as £1.6m, this figure has been amended to £1.5m in accordance with this process.
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