Fine food retailer and manufacturer Daylesford Organic is returning to its roots – on the farm – under a new plan outlined by new CEO Jamie Mitchell. Adam Leyland reports

'Annus horribilis' struggles to do justice to 2009 for Daylesford Organic.

The flagship farm shop burnt down. CEO Malcolm Fox died suddenly of a heart attack. And two weeks before going in-store, Waitrose pulled the plug on a contract for 80 lines Daylesford had invested in a creamery and stock after it secured the rights to Duchy Originals.

One shudders to imagine the impact on the bottom line. The latest accounts, from 2008, showed a £10m loss on sales of £8.5m. And with losses totalling £27m in the seven years since it was set up, media reports started to question whether Daylesford would ever amount to more than a lifestyle for its founder Carole Bamford, wife of JCB tycoon Sir Anthony Bamford.

One year on, however, a different picture is emerging. Under new CEO Jamie Mitchell, who joined in January, all aspects of the business have been re-examined, £6m in costs pruned, the farm shop restored to glory and sales are up to £10m. Breakeven beckons by the end of next year, he says.

Mitchell, former UK MD of Innocent Drinks, is relishing his new responsibilities "I've never felt more relaxed in my life" which include two London shops, a Selfridges concession, kitchens, an artisan bakery, a luxury clothing line, bath and body products, a licensing business for JCB, and electricity generation. "It's a truly unique business opportunity," he says. And crucially, he adds: "The team and I have a clear strategy to deliver it."

This week Mitchell has been putting the finishing touches to a revamp at the stores in Pimlico and Notting Hill. Next week Daylesford will open a concession in Tokyo its third international outlet and the biggest to date using franchise partner Katoaka. Closer to home, next month sees the launch of a range of Real Meals, with a week-long exclusive tasting at its Selfridges concession. A second London concession is expected within weeks.

Mitchell wants to re-establish Daylesford's Gloucestershire farm values, which were being watered down, he believes. The refits will bring farm produce to the front and centre of retail operations as Mitchell seeks greater connectivity with the shopper.

"There's a modernity, a beauty about the brand, but it has to connect," says Mitchell. "The Bamford family are one of the country's leading proponents of sustainable farming. This is what gives the brand its authenticity. We are the only retailer in London where the product comes direct from the farm. And by cutting out the middle man, we are more competitively priced than a lot of people realise."

A similar rationale underscores the goods for sale. As well as range rationalisation, Mitchell has sought to curb "overproliferation" of third party-sourced goods, sold under the Daylesford name, to focus on organic goods farmed and manufactured at the 6,000-acre farm, where 100 varieties of fruit and veg are farmed and 12 breeds of animals roam.

"I don't want us to be famous for our tea or our washing-up liquid," he says. "I want us to be famous for the products we make on the farm: bread, cheese, ready meals."

The focus is likely to intensify around identifying more "hero products". Featuring a new logo, Real Meals are the first iteration of this. The seven-strong range is made with pots and pans in Daylesford's kitchens. "I could have given the business to Northern Foods, but I don't see Daylesford's future in sticking our name on other people's products. That was the route pursued by Duchy Originals. It didn't work."

Mitchell admits the turnaround is far from complete. "I said I would give myself one year to determine the direction of the business. So far, I have worked with my team to control costs, and to provide focus within each of the business units. What is yet to be decided is in which area we will look to gain scale."

On the retail side, Mitchell believes the magic formula for successfully combining a grocery store with a café/restaurant at scale has never really been found, with the possible exception of Carluccio's deli/restaurant. And while the Pimlico store is now at break-even, profitability at Notting Hill is some way off, he admits, though this is partly because it is, at 6,000 sq ft, larger than Mitchell believes necessary.

He doesn't rule out more urban outlets, but expansion could include more rural locations, and building and kitting out farm shops for other farmers. The other option is to grow wholesaling. There is plenty of scope in Daylesford's extensive facilities: the artisan bread-making facilities could double output; the antique cheese presses could crank out four times as much; ready meals are at 60% of capacity. "And if I think the scale is there we can invest," he adds.

So which way will he go? Mitchell is "keeping an open mind". While his skill set is considerable manufacturing, logistics, marketing he admits he is still building up expertise in retail, foodservice and farming with the help of Carole and his team.

"Carole brings passion, a creative eye, a love of food and farming and sustainability. I bring commercial knowhow," he says. He also taps into the foodservice expertise of new finance director Nick Fletcher, former FD at Gordon Ramsay's restaurants; while M&S retail veteran Ed Goodman fronts retail ops and supply chain.

But the sense of fulfilment is palpable. "I love farming. I love the economics of chickens. I love figuring out what we do with the expensive cuts of meat left over from our ready meals range. I love challenging myself. And if you don't have the baggage, you can change the rules."

Jamie Mitchell snapshot
Age: 38
Education: Read PPE at Oxford; MBA from Harvard
Career: Best known for his role (2005-2008) as UK managing director of Innocent Drinks, presiding over its rapid expansion into a £100m-sales business. More recently, he was a consultant at Pret a Manger; and helped launch Neuro, the soft drinks brand. Previously, managing partner and co-founder of Vesta Group, a venture capital company. Other past jobs include McKinsey and speech writing at the CBI.
Hobbies: fast-growth businesses (he is a teaching fellow in entrepreneurship at London Business School); public policy (Mitchell currently sits on the CBI Taskforce for Higher Education); and hockey