THE managing director of Graham's, Scotland's largest independent dairy company, has declared his ambition to build it into a £100 million business after it achieved dramatic growth in sales and profits.
The family owned firm more than doubled pre-tax profits to £1million in the year to March from £420,000 in the preceding year, as it felt the benefit of a big increase in sales of higher value products such as butter.
Turnover increased by 21% to £68m from £56m during the year .
Robert Graham said the Bridge of Allan-based company was on track to enjoy another successful year. "We should have a decent piece of growth," he said.
Mr Graham believes the company has developed a strategy that should allow it to join the elite firms that achieve more than £100m annual sales.
Lamenting the fact that not many Scottish firms achieve that distinction, Mr Graham said he wanted the company to generate £120m sales in 2020.
Mr Graham said the company made great progress against a tough backdrop in the year to March, helped by its policy of building a broad mix of customers and products. "We are really balanced across customers and across products," he said.
About half the business is with major multiples including Waitrose, Tesco, Asda and Sainsbury's.
Graham's also supplies more than 5000 independent retailers, catering operations and the like.
Mr Graham said, without elaborating, that the growth in sales partly reflected the fact the mix had been weighted to customers who had been doing well in the market.
Graham's also won some new business. The rise in profitability was driven by a big increase in sales of higher margin products. These range from butter to ice cream.
The company is planning to increase production of cheese at its operation in Nairn after winning around £500,000 support from the Scottish Government.
Mr Graham plans to continue expanding the range. The company is looking into producing yoghurt in Nairn.
Mr Graham said the company could use the capital it expects to raise from a proposed housing development on land it owns in Stirlingshire to speed up the launch of new products and other growth initiatives.
The company recently ran its first TV advertising campaign as part of its efforts to build awareness of the brand.
Mr Graham is confident the company will be able to hold its own against bigger rivals. These include Muller, the German firm that bought Scotland's Robert Wiseman dairies for £280m last year.
"We are proud to be one of the few key players in the industry left in Scotland under independent ownership, and much of our success comes from our brand values and the positive working relationships we enjoy with 70 dairy farmers across Scotland," said Mr Graham.
Noting that the Graham family operates three farms in Stirlingshire, Mr Graham said it understood the financial pressures and daily challenges farmers faced.
"I think for our farmers we have got a good relationship. We are very fair to them on prices," said Mr Graham.
He said Graham's would increase the price it pays for milk to 32.5p per litre in November, from 31.5ppl. Following price rises last year, the latest increase will mean farmers receiving 7p more per litre than they did in spring last year.
The company cited the increased cost of raw milk, cream and fuel among current challenges.
"We have had to find an extra £700,000 per month from the market to cover the increased returns for farmers," said Mr Graham.
After Graham's saw profits fall by 30% in the year to March 2012, Mr Graham said the company had not been immune from cost pressures, including "ongoing competitive pricing in the dairy category with consumers buying on promotion".
The company might use acquisitions to help speed its development but will focus on organic growth.
It has around 370 employees.
The farming and dairy operation will celebrate 75 years in business next year.
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