Graham's to "continue development of value added products at its Nairn facility"

It is pleasing to be able to write of more positive developments at Graham's (Scotland’s leading independent milk processor) and in particular as these affect its Nairn facility (formerly Claymore Dairies). The Courier (published in Dundee) carried the story a couple of days ago, when it reported that turnover had increased 21% in the year to end-March 2013, with sales reaching £68 million.

I've written before about the firm's focus on turnover at the expense of margins (and ultimately profits), but the Courier article reports that pre-tax profits doubled to more than £1 million during the year. Managing Director Robert Graham is reported as saying that the firm would "would continue its development of added-value products at its base in Nairn", the investment in which is being part-funded by a 'marketing and cooperation' grant announced in June of £482,000 from the Scottish Government, estimated to be about 20% of the capital expenditure.

However, other salient reported comments by Mr Graham included:
- 'Graham’s was "really pleased" with a result which continued a long-standing pattern of 20% per annum revenue growth(*)'
- 'But he warned that margins would have to come under pressure if the company’s continued investment was to generate appropriate levels of profit.'

(*) As I have mentioned before when writing about Claymore/Graham's, the eliding of turnover with profit, and even more so the assumption that growth in turnover, accompanied by pressure on margins will necessarily lead to increased profits is a dangerous one.

Of course, Mr Graham is the man actually running the business and if pre-tax profits have more than doubled in the year as reported, then that is certainly a good result, although perhaps more important would be to know the level of net after-tax profits, upon which the linked article is silent. However, the latest investment in Nairn is likely to lead to more jobs in the town, very positive news. It is clear that the dairy and dairy processing sectors are highly-competitive, operating generally on very low margins for both producers (dairy farmers) and dairy processors such as Graham's, as a result of the pressure from the main buyers, supermarkets, to keep their costs as low as possible to maintain their own margins, not forgetting the consumer (such as me, but more importantly the average family trying to make ends meet) anxious to pay as little as possible whilst still expecting the products bought to be safe, wholesome and attractive to eat. All this is undoubtedly a delicate balancing act for firms such Graham's.

Graham's Dairies downgrades Nairn plant to distribution unit

(UPDATES - please see contrasting 'good news' story near end, plus a further later report about Graham's itself)

I wish I could write that the announcement that Graham's Dairies, based in Bridge of Allan in Perthshire, is to downgrade its Nairn dairy processing unit to a distribution centre only is any kind of surprise to me. Unfortunately it is not. In any case it is projected that 13 employees at Nairn will lose their jobs, reducing staffing levels there to 42.

As I wrote here in January of this year, its profits had been badly-dented in 2011 as a result of pressure on margins with the acquisition of new contracts to supply supermarkets - I described it then as perhaps a classic case of seeking growth in turnover by over-trading. Later in January I became aware that Glasgow-based Robert Wiseman Dairies had been acquired by Muller following its own poor economic results and simultaneously learned that Muller had cut the price it paid for milk from some suppliers.

The latest news about Graham's Dairies plans for its Nairn unit (until Setpember 2010 known as Claymore Dairies until its acquisition by Graham's Dairies) is not, I fear, the last we will hear of it. Supermarkets which are competing with each other to gain market share try to protect their own margins by squeezing their own suppliers, such as Muller and Graham's Dairies, and they in turn try to squeeze those further down the supply chain, in this case dairy farmers. As we now learn is already happening, from the first link above, the farmers supplying the Nairn unit are believed already to be receiving less in payment for their milk than those farmers who supply direct to the Bridge of Allan unit and it remains to be seen how the increased transport costs of trucking the raw milk to Bridge of Allan and back again to Nairn for distribution in the North as processed items will be factored into the costings - who will pay, in other words. I hope the optimistic projections from Graham's Dairies that innovation, marketing, new products and new contracts will not only increase sales, but allow it to maintain or improve its margins and thereby allow it to remain a viable concern.

1st UPDATE (Friday 11MAY2012 11.40 CET) I've just come across another item of business news in the Nairn area which is very happily a positive one - Asher's, the Nairn-based bakery business is to open a shop in Grantown-on-Spey, creating 5 jobs which will probably be part-time. According to company Director Ali Asher, its already-existing outlet in Aviemore (operating since 1998) means it already sends its distribution trucks to the area so supplying the new shop will be straightforward. It is expected the new shop will open toward the end of June, once the premises have been re-fitted and the new employees there will increase the company's workforce to 125.

2nd UPDATE (Saturday 2NOV2013 12.03 GMT) I posted a further article about Graham's on 31st October 2013, this time with much better news - please click here to go there now.

Juggling act for Nairn chicken producer

I have often noticed the mobile chicken sheds in a farm field near the main road from Nairn to Inverness - my observations have been that the sheds remain in one position for a few months at a time before being moved to other parts of the farm, some visible from the road, some not. I've also noticed the lengthy mounds of chicken manure that seems to rotate in one part of a large field. It is very interesting to learn more of this agri-business in an article in Farmers Weekly (not of course a publication I read regularly, it must be said).

Farmer Willie Lean also owns one of the best and most popular restaurants in Nairn, The Classroom Bistro, and much of the produce used and served there is locally-sourced, including of course chickens from his own farm, but also pork and beef from other local farms. Prices in that restaurant are not cheap, of course, but then quality and named-sourcing from local producers costs money, specially when supermarkets tend to force down the gate-price for their large contract purchases.