Bridge of Allan dairy firm Graham’s plans to further broaden its product range as it seeks to continue the rapid growth which saw it boost turnover by 21% last year.
Scotland’s leading independent milk processor said it was in the early stages of plans to develop new yoghurt and cottage cheese lines as it revealed how sales climbed to £68 million during the year to the end of March.
Pre-tax profits also improved, more than doubling to just above £1m in the 12-month period.
Managing director Robert Graham said the firm which is best-known as a milk supplier, but has diversified into other dairy products including butter, cream and ice cream over recent years would continue its development of added-value products at its base in Nairn.
A £482,000 processing, marketing and cooperation grant from the Scottish Government, announced in June, is expected to contribute around 20% of the capital expenditure needed to start up production.
The move follows a six-figure investment in a new cheddar cheese range unveiled earlier this year.
Mr Graham said the Nairn site’s extra capacity would prove important as the firm’s current base at Airthrey Kerse runs short of space.
“It gives us a full distribution footprint and extra capacity, which is great because our Bridge of Allan site is running very close to full capacity,” he said.
He added that plans for the new launches were in their early stages.
He stressed that the food and drink sector enjoyed one of the biggest economic multiplier effects of any industry, and that the company’s new move would create jobs in the Moray town.
Mr Graham, a grandson of the firm’s founder, said Graham’s was “really pleased” with a result which continued a long-standing pattern of 20% per annum revenue growth.
But he warned that margins would have to come under pressure if the company’s continued investment was to generate appropriate levels of profit.
“There’s a mix some of it is from additional products, some from our existing categories which are doing really well in terms of year-on-year growth, some from new contract wins, and also from some of our customers who are doing really well,” he said.
“If you are looking at capex levels, then our annual has been around £2m. From that level of investment to be making 1.5p out of each pound in sales is probably below our long-term track record.
“So the main thing is that to get a sustained level of capital expenditure and investment we need to work hard on the margins. We’re trying to be smarter and as efficient in the market-place as possible.”
He said the year-to-March figures had been followed by a good start to the present financial year, though there remained “volatility” in the market and costs, including farm-gate prices, were rising.
But Mr Graham stressed that the family company insisted on paying a fair rate to its 70 milk suppliers.
“As a Scottish family with five generations of farming experience and three generations in dairy, we are committed to growing our business in Scotland and extending our product lines while supporting Scotland’s dairy farming community,” he said.