Graham’s The Family Dairy has muscled its way into the UK's big four supermarkets based on traditional characteristics, with creamy Jersey milk at the core.

Provenance, in terms of a family business going back three generations, and innovation by adding protein to an increasingly wide product mix, are other key principles.

Nevertheless, the Stirlingshire, Scotland-based business revealed in December that it booked an annual loss for the first time in its history - £1.3m ($1.7m) before tax in the year to 31 March, 2023, despite turnover increasing to £153m from £127m.

The firm blamed “exceptional inflationary pressures” for an “extremely challenging year”.

Just Food caught up with managing director Robert Graham to find out how things have gone since then.

Andy Coyne (AC): How do you reflect on that loss-making year?

Robert Graham (RG): It was a brutal year. There were so many increased costs, energy, packaging etc. It was the first time we'd lost money and it was very hard.

AC: How have things shaped up since then?

RG: We’ve kind of flipped things around. There are still challenges, lots of costs, such as increased labour costs, are still coming through. We’ve had to pass those costs on. But it’s good to turn things around from such a difficult year and one in which there was so much uncertainty.

AC: Do you feel more certainty now?

RG: Yes, I do feel more certainty now and we’ve tended to do better when things are calmer rather than booming.

AC: Why is that?

RG: Food is generally quite steady as an industry. When the market is booming, like after Covid, you get staff shortages and shortages of things like cardboard and interest rates go up. The climate has got better. Dairy has had a good run over the last couple of years. People will always buy a pint of milk but protein has been massive. In fact it’s been a challenge to handle that [demand].

AC: Do you feel dairy is the natural home for added protein?

RG: Yes. Protein as it applies to dairy is natural and affordable. It could be a £1 protein yogurt as opposed to a £3 protein bar. Adding protein is all natural and it's done in-house.

AC: Is there something faddish about adding protein to everything, do you think?

RG: No. Protein is here for good. Kids are into it and they go to the gym so that generation will stay with it.

AC: Your product range now is quite broad, within the dairy field. Is there much more NPD on the cards?

RG: There’s probably a bit we can work on but we’ve launched quite a bit this year. Our products probably feed into two camps - traditional dairy, such as milk, butter, gold top, Jersey milk - and then on the health side, protein yogurts, skyr yogurts, kefir drinks, drinking protein etc. We’re launching Greek yogurt pouches, which are indulgent but kind of good for you.

Our volumes are up 20% to date year-on-year. Generally, dairy is benefiting from the products people think are good for you.

AC: What about distribution? How do you feel about your reach?

RG: There’s definitely more we can go at. In Scotland and Ireland we have heavy distribution, and in the UAE. It’s decent in England but there are a couple of big retailers we have very little distribution with. We are competing with European brands there.

AC: Are you seeing much competition from private-label?

RG: Bits, but they are not doing that well in the protein yogurt space. We are in decent shape there. We are kind of unique in how we make our products.

AC: What about exports?

RG: We have a big chunk into the Republic of Ireland and then a broad range in the UAE. We’ve also just got a few products into Saudi. It’s nice to have but Britain is our biggest market and the one where we have our main focus.

AC: How have you tackled the tricky issue of pricing?

RG: With all the cost pressures - energy prices, an increase in global commodity prices - we couldn’t recover enough fast enough.

AC: How did the supermarkets react to price increases?

RG: There’s always tension but there’s more cooperation now. Everyone needs each other. There is a tightness in the milk supply in Britain and in the processing capacity, so we all need to work together.

AC: Is enough done to promote dairy’s health bona fides do you think?

RG: I think so. The message is getting across, in our case about the naturalness of dairy and processing, the provenance of milking Jersey cows ourselves. It’s good to have a lot of things that attract consumers.

AC: Do you think customers are choosing between premium and non-premium when it come to milk? Are they competing with each other?

RG: I think people are buying both. I’ve got semi-skimmed in the fridge and gold top.

AC: I gather you’re not much of a fan of alt-dairy products?

RG: I’m pretty anti the alternatives. It’s the fundamentals of the product. It doesn’t taste that good, it’s expensive and it’s not good for you. And these businesses are losing money. I don’t see where that goes. It’s a disaster zone. People have thrown money away and I don’t think people trust them [the products].

AC: So you would ever consider launching plant-based products?

RG: Never.

AC: Nor hybrid dairy, alt-dairy products?

RG: I don’t really get it. We don’t use sweeteners. You have to stick to your principles. We’ve turned some business down because we wouldn’t use sweeteners. I’m no fundamentalist but I know how good dairy is and the health properties it has. You treat the consumer as stupid at your peril.