How Yeo Valley is diversifying from dairy and ‘democratising organic’

Driving through the Mendips in a Range Rover, Tim Mead is keen to show off his family farm. The Yeo Valley owner gestures to a grazing herd of cows and their calves – and a new cross-country walking route that runs over the land – while chatting excitedly about two new brand projects. One is a tree planting scheme, the other a pub he’s taken over in the local village of Blagdon.

Mead’s enthusiasm comes to an abrupt halt, however, when he talks about the wider politics of farming. Like the government’s proposed Inheritance Tax reform, first laid out by Chancellor Rachel Reeves in her October 2024 budget. Set to cut the 100% Inheritance Tax relief to 50% for farms worth over £1m, it’s “mean and punitive”, Mead insists.

Were the reforms in place 35 years ago, Mead wouldn’t be here at all, he claims. Instead, he would’ve been forced to sell up and walk away from Holt Farm in 1990 following the death of his father in an accident.

As it was, Mead was able to take over the day-to-day running of the land bought by his parents in 1961 and grow the Yeo Valley business “slowly but surely” into a major dairy player with almost half a billion in turnover.

The supplier now has more than 2,000 acres of land at its original Somerset site, employs 2,000 staff and works with over 100 farm suppliers to produce 98% of the milk used in the Yeo Valley organic brand.

The company is still family-controlled – 20% is held by an employee benefit trust – but there have been some changes in leadership along the way.

Most significantly, Mead handed over day-to-day running of operations to CEO Rob Sexton in 2022. He has worked with Yeo Valley for more than a decade, having started as its first group finance director in 2014.

The change enabled Mead to take on a non-executive role and focus on what he’s demonstrably passionate about: farming.

The leadership structure has kickstarted what appears to be an ambitious growth strategy. In March, it acquired production partner The Collective for an undisclosed amount.

The Collective was the “perfect fit”, says Sexton, given its focus on indulgence and kids’ yoghurts versus Yeo Valley’s more “natural” proposition. The venture brings “a lot of potential”, he believes, flagging the sweet and artificial products that still dominate the children’s yoghurt market.

There is also potential to broaden out Yeo’s own yoghurt pouch offer. But one thing is certain on The Collective, Sexton says: “We don’t want to kill its tone of voice or the brand.”

The spring deal took place amid a broader programme of diversification at Yeo Valley, which now “needs to represent more diverse products, because good farming is more diverse”, says Sexton.

So the once dairy-only operation is widening its scope. That started with its first foray into meat in March. The grass-fed beef burgers have already “beaten all our expectations”, says Sexton, and distribution is expected to increase soon. Plus, the burgers have the added benefit of ensuring farmers get another income stream from male calves.

Then, the following month, Yeo Valley added a Kefir With Granola pot in two variants.

At first glance, all these innovations might seem strange choices for a dairy supplier. But, as Mead points out, “when all our farmers are producing beef and sheep and oats and all that sort of stuff, it would have been pretty stupid to sit there in isolation”.

Case in point: Yeo Valley’s own Holt Farm produces two million litres of milk, finishes 240 beef cattle and 600 lambs, and grows wheat, peas, beans, lupins, oats and barley. So it makes sense to market a range of crops under the recognisable Yeo Valley name.

Ultimately, it means value for farmers can be kept within the supply chain – “and that feels like an absolute mission for us”, says Sexton.

All of which is part of Yeo Valley’s plan to “democratise organic”. Despite a cost of living crisis, Sexton says there is still headroom for more organic spend – an area in which the UK currently lags behind the rest of Europe. A 2022 study by the Soil Association found only 3% of UK land was organic, compared to 10.4% in Europe.

The time is right to change that, believes Sexton. The food industry “has gone through a period of using the chemistry set in our food and in our farming and we’re coming to this really positive point of understanding there are knock-on consequences”. Plus, as input costs stabilise somewhat, the price of organic should become increasingly comparable to conventionally produced products.

 Still, “it’s very hard to become an organic farmer” with the limited financial support available, says Sexton. The process includes a two-year conversion period in which a business must farm organically but be paid conventional prices, for example. Yeo Valley is doing its bit to offset the loss of government funding by helping to fund farmers to make the switch to organic produce.

Organic isn’t the only funding gap farmers face, though. New subsidy schemes created in the wake of Brexit and the loss of the Common Agricultural Policy are “sticking plasters”, says Mead. “The money isn’t going to farmers to help them convert to a more biological system and produce good food.”

Farmers have blamed successive governments for failing to understand agriculture. For Mead, the problem is more nuanced. Farming is such a small part of GDP that it lacks a “seat at the table”, he says. “It doesn’t carry enough weight.”

But as Sexton points out, “when it comes to food and farming, it touches all of us, from our health through to our environment”.

It’s why Yeo Valley is working so hard to bring a sense of “positivity, pride and joy back into good farming” which is “desperately needed”, says Sexton. “It’s the fabric of our country and it’s the fabric of the future health of generations.”

And that’s something worth showing off.