Since taking over as First Milk CEO, Kate Allum has turned it into an integrated, international concern. And despite high-profile export deals, she’s content for the company to grow steadily
Kate Allum is visibly embarrassed. It’s mid-January in Glasgow and she’s about to give a speech at the Semex dairy conference, when a farmer takes to the mic and announces to a packed room that if the industry had its own version of Britain’s Got Talent, Allum would surely be the shoo-in winner.
It’s not bad going for the CEO of a dairy farmer co-operative that, not so long ago, appeared to be heading the way of the now-defunct Dairy Farmers of Britain. First Milk has certainly come a long way since Allum took over in 2010, recovering from a near-£10m loss in 2009 to post £7.2m in pre-tax profits last year. Most industry experts agree that British dairy is in a better place thanks to the work of Allum and First Milk chairman Bill Mustoe in turning the co-op around.
Getting there hasn’t been easy, as Allum is first to admit. “If I had stood up at our agm two years ago and tried to tell our membership where we were going to be today, I would have been carted out,” she says. “There was a huge amount of confidence to rebuild.”
Since coming on board, Allum’s priorities have been to make First Milk more efficient and more resilient - she’s tackled its “silo mentality” to create a more integrated company, she’s diversified its business with moves into premium dairy products and soft cheese, and given it an international tinge through high-profile export partnerships. She’s also ruffled a few feathers. Her critics argue that First Milk’s international moves are more opportunistic than robust long-term planning, market grumbles persist about the co-op’s comparatively low ranking in milk price league tables, and rumours that it is continuing to lose milk volume won’t go away. But Allum is unequivocal - First Milk is not losing volume. “In fact, we’re growing volume and we’ve recruited 150 million litres,” she counters. “Yes, in our darker days, people were leaving First Milk, but today we have never had more people wanting to talk to us.”
So what about First Milk’s new enthusiasm for all things international? During Allum’s tenure as CEO, the co-op has entered into an export alliance with Eilers and Wheeler as well as a high-profile whey protein joint venture with Fonterra, while its recent acquisition of Kingdom Cheese and Dairies has given it a foothold in soft cheese, both at home and abroad. Doesn’t her love of exports mean she is leaving the co-op and its farmers at the mercy of volatile commodities markets?
Allum is convinced the dynamics of global supply and demand will play in her favour. “We’ve got 227,000 people being added to the world every day, so demand will continue to come from outside the UK,” she says.
Plus, Allum is keen to stress, the future of First Milk isn’t just all about exports. “I’m not sticking dramatic figures out there and saying 50% of our products will be exported you don’t need massive volumes to be able to access those markets,” she says. “We’re at 7% today, and our first target will be to take it to 10% over the next 12 to 18 months and then lift it from there.”
The bedrock of the business, she adds, will remain the UK, with the Lake District Cheese Co brand the “jewel” in First Milk’s crown. To this end, the co-op plans to invest £10m to create a new cheese packing plant in Maelor (see p39), and has also recently announced it is building a new cheesemaking facility at its Campbeltown site. Allum also makes short shrift of speculation that the joint venture with Fonterra is the first step towards a bigger deal, with First Milk ultimately being turned into Fonterra UK. “There’s never been a discussion between us and Fonterra that we would be anything other than partners,” she says.
As for her wider vision for the industry, Allum believes UK dairy would do well to look beyond its own milking parlour every once in a while. It’s an unsurprising theme for a woman who came to dairy only three years ago and whose CV includes managing night shifts at the Mars petfood factory in Melton Mowbray and a 10-year stint working for McDonald’s. “One of the things I learnt at McDonald’s and at Mars was that you do need to take a step back and look at what you can learn from other parts of the food industry and other industries altogether,” she says.
One example of how Allum has brought ideas from other industries to First Milk is Dairy Maniacs, the co-op’s kids dairy brand. Having worked with DreamWorks during her time at McDonald’s, she wanted to explore how licensed characters could be used by First Milk, and jumped at the chance when the studio approached her about creating a branded children’s dairy range. Kung Fu Panda-themed packs of Dairy Maniacs Cheddar portions went on sale last June, and the range was refreshed earlier this year with DreamWorks’ Puss in Boots.
So, no plans for global domination? Will she bring about further consolidation in the market? What are Allum’s key targets for First Milk? She hesitates. “I see a lot of companies get very hung up about ‘we’re going to be the biggest, the best, the world leader in this and the number one in that’,” she says. “It’s very easy to say we’re going to be number one, but often the challenge is not getting there it’s staying there and not making the trade-offs on the way.”
No talent show superlatives, then? Allum smiles. “I’d like to be second in everything.”