It pays to follow your customer, as Delamere Dairy can tell you. From farming a few goats in the lush green Cheshire countryside to being a pioneering exporter into 20 countries, its journey has been a remarkable one.
Thirty years ago, Roger and Liz Sutton decided to get into farming by buying three goats. Soon they had more. Asda and other supermarket chains began to sell the goats’ milk being made by the small Cheshire farm business.
By 2002, turnover was more than £2m and a new site was required. At that point, the decision was made to outsource production rather than build a brand new facility. That decision has underpinned the business model ever since. The focus: follow market demand.
“We are never slaves to a particular machine,” says Delamere Dairy’s managing director (and now majority owner) Ed Salt. “We can move into new markets quickly and be scalable.”
This repositioning enabled Delamere Dairy to diversify. Over the decade, it added more products to its portfolio – from yoghurt drinks to cheese to almond milk and, under its TopLife brand, to goats’ milk-based pet foods. The company even started selling cows’ milk.
The drive to export
But while this spread (pun intended) of products provided Delamere Dairy with a good base, it was still dependent on its home market. “When the recession came, we were concerned that our business was selling top-end niche dairy products almost exclusively in the UK,” recalls Salt.
An export strategy would de-risk the business further.
Export didn’t just de-risk the business, it propelled it forward. The UK remains Delamere’s bread and butter, so to speak, but it’s the export growth that has been stunning. Its international sales have raced ahead by a remarkable 214 per cent over its past two financial years.
The company now sells its dairy products into 20 countries, including China, the USA and France. Exports now account for 20 per cent of the company’s £25m turnover.
Delamere Dairy was ranked fourth in the recent Sunday Times BT Business Fast Track SME Export 100, which was also supported by the Business is GREAT campaign.
Milk to China
Although the company had been selling for some years into Italy, the China market has been the real catalyst. Here, rather than initially sourcing a distributor, Salt’s view was that Delamere needed its own person in situ. “I had been told that it was worth spending on the ground, especially when you have a niche product, as that way you could make bigger inroads.”
He found the right man in Hong Kong and opened an office in 2011. “I had the luck to know someone there who I could trust, so we grasped the opportunity,” he says. “It was a speculative risk. I knew we would lose some money but we were going to give it our best shot.”
It turned out to be a great shot. Today, sales to China account for 18 per cent of Delamere Dairy’s turnover and Salt won’t be surprised if that share is more like 30 to 40 per cent in the near future. At present, Delamere’s presence remains the one-man office in Hong Kong but an office in Shanghai is being planned.
While Salt’s initial idea had been to focus on selling goats’ milk, it soon became clear that cows’ milk was where the volume business lay. “China is a massive dairy producer with the largest herds in the world but they can’t produce enough to meet the demand,” he explains.
“The Chinese dairy market will double in the next ten years but I believe they will be short of milk for the next 20 years. It’s the last great frontier of dairy. You only need a small fraction of the market for your volumes to be huge.”
In addition, demand for quality standards in the wake of food health scares in China has made Western dairy products more appealing.
However, Delamere Dairy has also pioneered the export of liquid goats’ milk into China. “We had tried to import our products but they had failed to meet Chinese regulatory standards,” explains Salt.
When the decision was questioned, it turned out that the products were being tested against cows’ milk standards. This gave Salt the opportunity to work with the Chinese trading standards body (CIQ) to produce the appropriate standards. “So we know we were the first company into China because we developed the standards with them,” he says.
Use UKTI, don’t go it alone
Salt admits that Delamere was belated in its use of UKTI support. “We didn’t use UKTI very much at first because we thought we wouldn’t be eligible. We put our heads down and didn’t ask.” And while the company certainly didn’t do badly from its own efforts, Salt is certain that it could have got further and faster had it engaged with UKTI earlier. “They bring a wealth of high-level networking opportunities that we couldn’t otherwise participate in,” he says, observing that in a market such as China the ability to communicate at the appropriate level is incredibly important.
With these lessons under his belt, he now encourages everyone to talk to UKTI. As well as participating in trade missions, Delamere Dairy has used several UKTI services including its Passport to Export and Tradeshow Access Programme.
“Don’t be fearful and never presume – just pick up the phone and speak to them.”
He also says that companies need to stop thinking of export as a different activity; after all, business is about following the customer.
“If your market changes, you have to move with it. You have to morph and move, morph and move. If you had told me three years ago that nearly 20 per cent of our sales would be in Asia, that we would have an office in Belgium as well as Hong Kong, and that I would be appointing export directors, I would have laughed you out of the room.”
Whether you want to start or grow your exports, find opportunities, events and practical guidance on the Exporting is GREAT site.