Member Article

Kavli's ambitious growth rooted in North East, says boss

Gateshead’s Kavli is best known for producing the Primula Cheese brand. Bdaily put some questions to CEO Paul Lewney, on the food industry, the firm’s growth plans and why the North East has been such a good home for Kavli.

Kavli has a strong North East background - what makes the region such a good base?

Kavli has been in the North East since 1936 so we have built up a fine history, a good reputation and strong links in the region. The infrastructure we have in place as a business will allow us to expand further within our chosen business sector and geographical location. When we looked to make the recent acquisition of St Helens Farm, it was important to us to use complimentary and like-minded teams who were also based in the North East. That was one of the reasons we chose to work with Muckle LLP and KPMG – both had great people who were based in Newcastle and I would thoroughly recommend them.

Can you briefly outline the landscape in your sector at the moment?

As a business we operate predominantly within the Multiple and Independent retail sectors, with other brands competing for consumers with our Primula Cheese Spread. It’s therefore critical that we keep Primula relevant and up to date whilst retaining the trust in the brand that we have developed over many years with our consumers.

What major challenges in the industry have Kavli overcome?

Remaining competitive with a focus on input costs is key, whilst ensuring we can support Primula both in stores directly to the consumer and also above the line through appropriate media. Some of our competitors have taken the decision in the past to reduce the amount of cheese in their spreads whilst we maintained our premium position and didn’t re-engineer the product quality down. This focus on quality and consistency has helped keep Primula popular over many years with its consumers.

Following the recent acquisition of St Helen’s Farm dairy, does the business plan to make other acquisitions?

Although it is never easy to secure an acquisition, we are actively looking to grow through further acquisitions within the added value Dairy category and have a management structure in the UK that facilitates this. Our parent company in Norway have been very supportive during the process and are keen for us to continue to grow ahead of the market. However, each potential acquisition will be evaluated on an individual basis and we are not just looking to grow our size - we will ensure any additional businesses are a good long term fit for the future and offer good potential to grow.

What will growth look like in the North East, and further afield?

Our plans are that Kavli UK will remain firmly based in the North East with our UK head office being on Team Valley. We hope to be able to add further Dairy based businesses to the current portfolio, but they could be located elsewhere throughout the UK. Elsewhere within the UK we have recently announced an investment at our Castle MacLellan Pate business, based in Kirkcudbright, South West Scotland. As the largest UK manufacturer of Premium pate for a number of high quality retailers and also under the Castle MacLellan brand, it is important that we lead the category into growth and we therefore plan to add capacity that we facilitate this growth over the next 5-10 years. To do so, we will be spending up to £5m on the site.

How has the relationship between suppliers, like Kavli, and grocery retailers changed in recent years?

It never gets any easier. We must always remember that our products have to add value to our customers business or over time they will have a reduced need for us. This could lead to our competitors taking our space on shelf in stores. Customers will always be demanding – that’s what makes them good at what they do. For the relationship to work to its best for all parties, we just need to ensure we can offer the best service, quality and innovation to keep us ahead of our competitors.

How does UK food science and technology shape up against other countries?

Newcastle itself offers great opportunities for people in Food Science and Technology at both the Universities. To have this so close to hand is excellent and gives us the chance to bring good people into the business after their degree. Overall the UK is probably near the forefront in this area when compared to other countries we have knowledge of.

This was posted in Bdaily's Members' News section by Tom Keighley .