Austrian dairy Nom recently announced plans to launch its Nom Naturally yoghurt into the UK market. The range is being promoted as containing “100% natural ingredients” and follows the completion of the company’s GBP60m (US$93m) “state-of-the-art” Shropshire dairy. In this month’s just the answer, Michelle Russell caught up with David Potts, Nom’s UK managing director, to find out more about the group’s plans for the market.
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just-food: What was the reason behind Nom entering the UK market?
Potts: It’s mainly because half of the yoghurt market is imported at the moment. If you look at the market place and you look at what we consume in the UK, it is around six billion units. That’s a combination of yoghurt and yoghurt drinks and of the six billion consumed each year, three billion comes in from abroad. So it’s a great opportunity for a UK-based manufacturer to close down some of that or soak up some of that market.
just-food: Why has Nom not entered the UK before now?
Potts: Because consumption is increasing, the importing of products is increasing so at some point you’ve just got to make a decision. The decision was actually made a couple of years ago to build a plant here. It’s taken 12 months to build it but it takes a number of months to plan …but now it’s up and running.
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By GlobalDatajust-food: Your role must be relatively new. What is your background?
Potts: I worked at Muller from 1989 so I was one of the original few people that started the Muller business and I stayed with them for 18 years or so. I was commercial director at Muller for a long time and then I came here in November.
just-food: What was your reason for leaving Muller?
Potts: Personal reasons really but the guy that runs the Nom business from Austria [David Roehrig], he was also the president of Muller until 1996. So him and I knew each other for a number of years and then he left Muller to start this business, to work at Nom in Austria and then obviously I followed and the time was right for me really.
just-food: You launched the Nom Naturally yoghurt into the UK market in May. Why choose that product in particular?
Potts: It’s not the first product because we are actually producing private-label products as well for Tesco, Asda and Aldi, and we have actually been importing products from our plant in Austria as well for the last two years. What we want to do in the UK is not be just a private-label manufacturer but also a branded manufacturer. And it’s more prominent for consumers if you launch a product that is made in the UK, a brand of product that is well understood, so you know where it comes from, what it’s made from and it’s authenticity.
just-food: Following the Nom Naturally launch, have you plans to roll out any others in the near future?
Potts: We do. It’s too early to say because we don’t want to let the cat out of the bag with our competitors but we will be launching other products. The first priority for us is to extend the distribution out into other outlets, so to get other retailers to take our product.
just-food: Which would you say is Nom’s biggest market?
Potts: The Nom business in Europe will turnover around GBP400m (US$656m) in Europe and all of that production is out of Austria. Half of that is exported outside Austria. They service most of the European countries; places like Czech Republic, Hungary and Poland.
just-food: Do you see potential for entering further markets?
Potts: No because we need to do one thing at a time and do it really well. What we’re concentrating on right now is the UK and to make sure the factory is up and running, that we’ve got the best quality products, that we’ve put systems in place, we have the right people and to get our service levels as high as we possibly can and become a really credible supplier to our customers in the UK.
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For Austria it’s more up and down for them. Because Austria only has about nine million people in population it’s always going to be a relatively small market compared to the UK. Having said that, for them, what they do well is on export, so they’ve found other consumers by exporting their product.
just-food: Upon launching of Nom Naturally, the company said it wanted “to add value for customers by supplying locally”. By this do you mean it’s an opportunity to offer retail customers (supermarkets) better prices?
Potts: It’s a combination of the whole thing really. So if you think about retail prices, because we’re local, we don’t have those huge distribution costs and transport costs. So if three billion pots of yoghurt are coming in from abroad, there’s a massive cost attached to getting that product in. There are also the carbon footprint issues and environment issues to think about. And actually consumers are now much more looking to buy, if they can, more locally produced products.
just-food: What are your thoughts on the dairy market in the UK and Europe at the present time?
Potts: The price of milk is always going to be a very emotive issue because obviously farmers want more and it’s difficult for manufacturers because the retailers are trying to keep prices down as well. I think you have to pay a fair price for the milk because it’s ok manufacturing yoghurt or products in the UK but when you bring milk in from abroad, that seems like a crazy thing to do. We’ve got to make sure that we keep the dairy farming industry alive in the UK. What we don’t want to see is farmers packing up and a lot of them are doing that so we’ve got to find a way somehow of ensuring that our farmers get the right price for their milk and I don’t think anybody really knows what the answer is to be perfectly honest.
What we don’t want to do is to bring milk in from abroad, so it’s in everybody’s interests that we keep the payment to the farmer as sensible as we can. Right now I don’t think anybody really knows what the true value of milk is. There are lots of influential people out there in dairy, like the NFU, and they should really be getting to grips with all of this somehow.
just-food: What are Nom UK’s future ambitions?
Potts: It depends how far ahead you look but certainly in the short-term it’s all about making sure that we do all the simple things right. Looking ahead, this plant here, by the end of the year, will be capable of producing over half a billion units of yoghurt and yoghurt drinks. So, obviously the number one priority for us is to utilise that capacity as much as we possibly can.
