How did Yeo Valley’s Tim Mead turn a small dairy farm into Britain’s leading organic brand?

Agriculture business profile: Yeo Valley

In this profile of the agricultural industry, Director discovers how the pioneering spirit of Yeo Valley’s Tim Mead turned a small West Country dairy farm into Britain’s leading organic brand

Tim Mead is not one for grand business plans. “At Yeo Valley we have what we call plan A,” he says. “The A stands for again—every time you turn around a corner there is something new and you have to start all over again, so the plan changes every day.”

Having taken over the family business in 1990, aged 26, when his father, Roger, died in a farming accident, Mead alongside his mother, Mary—a renowned cattle breeder who last year picked up the BBC Farmer of the Year award—has since turned many corners and built a strong brand in the Yeo Valley Organic range.

Yeo Valley was born out of the entrepreneurial spirit of Roger and Mary Mead, who started making yoghurt on their farm in Blagdon, near Bristol, in 1974; almost by accident. When they opened a tea house they found themselves with a surplus of skimmed milk from the production of clotted cream and decided to have a go at making yoghurt in a couple of milk churns. Soon Lag Farm, where they lived, was converted into a dairy and the family moved into neighbouring Holt Farm.

In the early days the yoghurt was not organic and business came from just a couple of the major supermarkets that bought own-label Yeo Valley products. Today the company has an annual turnover of £190m and produces 2,000 tonnes of yoghurt—eight million pots—every week and  supplies all the leading UK supermarkets. The Yeo Valley Organic range makes up 40 per cent of business production, has a 60 per cent share of the organic yoghurt market and now includes other dairy products such as butter, cream, cheese, desserts, ice cream and milk. Mead prefers to think of the company as a farm and a dairy rather than a manufacturer.

Patrick Holden, director of the Soil Association, heaps praise on Mead’s attitude. “I think Tim was a man on a mission when he took over the business. Right from the inception, the company has behaved impeccably and supported the values of the organic movement,” he says.

Growing agriculture business

Although Holt Farms, the collection of dairies, production sites and 1,200 acres of land amid spectacular scenery in the Mendips, has grown considerably and today has more than 1,100 employees, it has the feel of a smaller family business, with Mary still in charge of the 450-strong herd of pedigree cattle. Mead laughs at the idea of a vision for the business. “People like to ask about business plans, but when I got involved, the plan was to make enough money to have a nice holiday and to pay for the house—pretty much the same as everybody else who goes to work,” he says. “We do have a vision of where we want to go, but for the first 10 years when I was locking up the factory at 4am and had to get up at 6am I think the only vision I had was hallucinations.”

Going round the Yeo Valley sites it is clear that Mead possesses an extraordinary vision and an eye for innovation that inspires those who work for him. It is evident, too, that Yeo Valley is about much more than yoghurt. On one site stand a couple of domes—Eden Project style but smaller—that he bought from Canada to see if they could grow more fruits and vegetables. “It is typical Tim,” says one member of staff. “It starts out as a mad idea, but then it turns out to work well.” His ideas may be original, but they tend to succeed. A short drive up the winding country road stand 40 acres of miscanthus, a perennial grass ideal for generating heat and electricity when converted into wood pellets, which will heat the Yeo Valley conference centre and the houses attached to the milking facilities. “By taking 40 acres of land for miscanthus we should be able to produce the equivalent of 70,000 or 80,000 litres of oil. It makes sense to try it out,” he says. He is hopeful that in the future the company can replace the oil used in the dairies with woodchips.

Launching the Yeo Valley Organic range in 1993 fitted perfectly with Mead’s allegiance to balanced farming. “Everybody who is a farmer deep down understands the balance of animals and nature and crops and rotations, and I think most farmers have an in-built sense of what is the right thing to do,” he says. Care for the land and the animals at Yeo Valley is a prime concern and all production sites are certified by the Soil Association.

The cows have room to roam, their diet consisting of clover-rich grass grown without the use of artificial fertilisers and pesticides. Wildlife is encouraged to flourish and conservation of the land extends to rebuilding limestone walling and placing hedgerows. In an effort to reduce pollution and food miles, lorries transporting Yeo Valley yoghurts are double deckers. The company has twice received the Queen’s Award for Enterprise in recognition of its contribution to sustainable development.

“Yeo Valley understands what I would call true corporate social responsibility, which is about doing it because it is the right thing to do, and they are backing the people upon whom their business depends,” says Holden. “This was evident in the way Tim helped establish the Organic Milk Suppliers Co-operative (OMSCo).”

Before 1994 all milk was sold by the Milk Marketing Board, but under deregulation of the sector farmers were left to sell direct to manufacturers and organic milk producers suffered from a shortage of buyers. “When organic farmers were looking for somebody to buy their milk, we encouraged them to get together and promised to buy their milk for a period,” says Mead.

Holden says: “Usually, manufacturers don’t like it when farmers get together because they don’t like the strength that working together gives them, but Tim encouraged organic milk farmers to set up a co-operative and promised support by giving them a guaranteed market.”

Yeo Valley on sustainable business mission

Yeo Valley Organic continues to take milk from around 100 OMSCo farmers in the South West to supplement the milk that they produce on site. But for Mead this is simply the logical way of running his business. “If things are not in balance or sustainable then they aren’t going to be there forever, are they?” he asks. “I think most farmers feel that they have to take care of the land and what they are farming, and I think most of them feel, financially, it is difficult because the returns from farming average at 1.5 to two per cent on capital over the last 50 years,” he says. He blames a distorted market for this low return.

“A true market consists of many buyers and sellers and a market price, but when it comes to the growth of multinational food processing companies, farming is something that just doesn’t scale up,” he explains. “Somebody is not just all of a sudden going to own 100 dairy farms because to look after dairy cows you have to be on the ball. So, taking dairy as an example, there are always going to be many farmers, but there are three or four companies that buy 80 or 90 per cent of milk.”

Yeo Valley also finds itself squeezed by recession. Sales have fallen over the past couple of years and redundancies have been made. “Organic has taken a knock, but I don’t think the people who bought into organic in the first place will change radically,” says marketing director Ben Cull.
Amarjit Sahota, research director of Organic Monitor, says the market, now worth in the region of £1.4bn, is no longer such a niche sector. “Tesco did some research which showed that 90 per cent of consumers buy at least one organic product, so it is quite mainstream now,” he explains.

Yeo Valley Organic, says Sahota, is the leading organic brand in the UK, not just in the dairy sector but in the food sector generally. “They have been pioneers. They were the first company to start producing organic yoghurt on a large scale in the 1990s and because they were the first they have a strong market position.”

Cull believes that Yeo Valley Organic has become a market leader because it is a brand with authenticity. “Organic is about buying into an ethos and a way of farming. A true organic consumer wants to buy from a credible outlet,” he says.

Although sales are down, Sahota believes Yeo Valley will maintain its healthy position. “We will see new entrants in the organic food market, but not in dairy because it is already saturated,” he says. “Danone and Müller have both previously launched organic ranges and they both withdrew them after a year or so because they were finding the market too competitive.”

Few people would know that most products at Yeo Valley are conventional, but Holden thinks Mead has been smart to combine non-organic with organic production. “He realised that to build an organic brand he needed support, so he used the conventional company to look after the development of the organic brand,” he says. “Yeo Valley is a company with a 100 per cent non-organic background and it has taken its own producers on a journey. They have built their own market and on the way they have given an opportunity to non-organic farmers to convert.”

Mead has no qualms about producing non-organic foods. “We are trying to operate a business that doesn’t force us to charge more for our products than any of our main competitors, which are basically all the multinationals,” he says.

He hopes business will emerge from the current crisis with a different set of values. “Maybe we have started to learn lessons from the financial sector across other sectors. Maybe big is not always beautiful, maybe multinationals aren’t always the answer. If you are just doing things for profit, who are you serving? The shareholders or the people who buy your products?” he asks.

At Yeo Valley there are no shareholders to serve, so the focus is on providing good products. “Our products have to be good value for money,” says Mead. “If we are selling a product and taking into account everything the customer knows about the product, including the price, where it has come from and what the business is like, and they come away and say ‘that is good value for money I’ll buy that again’, that is our objective.”

By Tina Nielsen, March 2009 : Director Magazine

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