PROFITS at dairy operator Graham’s melted last year as cost pressures and aggressive pricing tactics squeezed margins at the family-owned firm.
The Bridge of Allan-based company said it has managed to win market share with its branded butter and milk, helping sales hit £56 million in the year to 31 March, up from £49.6m in the preceding 12 months.
But pre-tax profits were 30 per cent lower at £420,000, compared to £604,000 previously. It is the second year of profit falls since Graham’s topped the £1m earnings mark in 2009.
Managing director Robert Graham said: “Despite challenging trading conditions, including the rising cost of oil and fuel impacting on distribution and cost of packaging, the past 12 months has seen the Graham’s brand continue to record robust sales growth.”
He said that Graham’s had not been immune from cost pressures and that it was also hit by ongoing competitive pricing in the dairy industry, which meant consumers are increasingly only buying products that are on promotion.
The business also bore one-off costs from its investment in the launch of a “spreadable” butter and a plan to “refresh” its organic range of butters, creams ice-cream and milk.
Produced in a new £1.2m plant at the family’s Airthrey Kerse Farm, the spreadable butter is sold in Scottish branches of Asda, Morrisons, Sainsburys, Tesco and Waitrose.
This summer Graham’s re-branded its spreadable butter after perfecting the formula for churning it with oil to produce a smoother consistency. At the time, it said it had sold £500,000-worth of the product.
The company also sells cheese, creme fraiche, eggs and yoghurt.
But Graham, whose grandfather founded the dairy, added that market research shows Graham’s was benefiting from growing demand for “trusted branded products”.
The firm has more than doubled its turnover since it spent around £250,000 creating and implementing the “Graham’s Family Dairy” brand in 2005, which aimed to portray “farming values, family values, care and Scottishness”.
Graham said: “Upward sales growth, notably in our spreadable and award-winning range of butters, highlights discerning customers continue to seek out the reassurance of buying high quality, great tasting dairy products – precisely what is offered by our 73-year-old family dairy.
“And, in the face of wider economic uncertainty, we are very proud that our continued investment in plant, brand and award-winning products has seen ‘Graham’s The Family Dairy’ move up five places to be ranked ninth in the prestigious Top 40 Scottish Brands Review.”
Graham anticipates that market conditions will remain challenging for the next 12 months at least, but said the firm could continue to increase its presence on supermarket shelves.
Earlier this year, Graham’s larger rival, Robert Wiseman Dairies, was sold to German giant Muller for £280m. The deal saw the East Kilbride-based firm de-listed and netted the Wiseman family almost £100m.
