27th August 2021 By Bridget O'Connell | email@example.com | @foodtickernz
Canterbury-headquartered Dairyworks has stood up a raft of ever more stringent measures to protect against the Delta variant and adopted the mindset that it is already in the South Island.
Chief executive Tim Carter said his 250-strong team, which operated as a standalone unit of Synlait, wanted to leave no room for error when it came to Covid-19 in an effort to both ensure staff felt safe and to keep operations running efficiently as consumer demand for its dairy staples such as cheese and butter skyrocket.
“When [consumers] get six hours notice before lockdown it is near impossible to prepare for it. Our cheese and butter categories, they are up 50% – there has been a massive spike,” Carter told the Ticker.
“We are absolutely operating like Delta is in the South Island because if you let you guard down you take out a whole shift, then you’ll have no chance of catching up on that 50% increase in demand.
“It is a mindset throughout the whole business – it is in the South Island, and it is Delta.”
The lion’s share of Dairyworks’ sales are domestic under its Alpine and Rolling Meadow and eponymous brands manufactured in Christchurch’s Hornby and 145 km south in Temuka where the company was founded.
Synlait bought the business for $112m in 2019 as part of its diversification strategy. Carter, who was previously at Fonterra, has been chief executive since August 2018.
Any measure the company took for last year’s lockdown has been tightened up, Carter said. That included the use of PPE, mandatory masks and face shields, side entry, QR codes, daily staff declarations, physical distancing, staggered stops and starts, increased cleaning frequency, and perspex shields on packing lines.
To meet the increased domestic demand for its cheese, butter and yoghurt, the company has put on more shifts to run extra lines at its factory, and so far domestic supply chains were holding up.
Outside of the demands of Delta, Carter was continuing the domestic strategy of transitioning Dairyworks from “a cheese business into a dairy business” by entering new categories – including plant-based dairy – and building out its product range within existing categories.
This means trying to make Kiwis “more Australian”.
“New Zealanders are a 1kg block of cheese types. Sales of 1kg blocks of cheese makes up 73% of the total cheese market in New Zealand, but in Australia it is only 25%, there they purchase it the way they are going to consume it [sliced, grated for example].”
The idea is to migrate cheese-loving Kiwis to the Australian way of shopping – to move the mix into the higher value segments.
As such, the Dairyworks’ cheese range now included flavoured slices, grated, sticks, cheese and crackers for adults and for kids, and cubed cheese – new in recent weeks – as it hits hot button trends such as snacking, convenience, culinary, and goes after lunches including kids lunchboxes.
“Those segments – slices, grated, snacking – are in double digit growth, they’re coming from a small base, but growing quite rapidly,” Carter said.
Yoghurt would play a bigger role for the Dairyworks brand going forward, following the “above expectation” launch of a single serve high-protein yoghurt and muesli product.
“That showed Dairyworks can stretch, it is not just a cheese brand,” Carter said, adding that there were two new yoghurt ranges lined up for launch pre- and post-Christmas.
The group’s speciality cheese brand, Talbot Forest, also purchased by Synlait in 2019 and now amalgamated into Dairyworks, was also being prepped for full pre-Christmas relaunch.
“Talbot Forest has really great potential, it just hasn’t had any love for really long time. We have ambitions for it to be a strong player in the New Zealand market and in export markets,” Carter said.
“We are going for a full October relaunch across brand, packaging and marketing and communications – it is a big investment.”
According to Synlait’s annual results released last September, when the company booked a 27% increase in revenue to $1.3bn, Dairyworks and Talbot Forest were this year expected to contribute $250m to group revenue.
Most of this would be from domestic sales, although Dairyworks was growing in Australia where it sold exclusively in Woolworths. It was also working on a”substantial” move into retail in China, Carter said.
On the company’s plant-based ambitions, Carter said it was a trend the company wanted to tap into and it had done a lot of work in the cheese and yoghurt space but “there was nothing coming out in the next six to twelve months”.
An acquisition to fill this gap was always a possibility Carter said, although with Synlait’s share price having dropped from more than $9 in 2019 to graze $3 earlier this year and a revolving door of departures, there would need to be a strong investment case.
“If there is a genuine potential opportunity out there, and it made sense, we would look at it,” Carter said.
“But we are part of a group, and our role right now is to contribute to steadying the ship for Synlait.”
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