Milking it!

Colin Gordon, CEO, Glanbia Consumer Foods

Colin Gordon has led Glanbia Consumer Foods for nine years during which time the Irish dairy industry has changed almost beyond recognition

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15 April 2015 | 0

Charley Stoney, group managing director, Alternatives

Charley Stoney, Alternatives Group

Gordon is also chairman of the Food and Drink Industry Ireland (FDII) and vice chair of the recently published Strategy Report for Prepared Consumer Foods for the Minister of Agriculture. He spoke with Charley Stoney about the considerable changes that have taken place over the last number of years and how they have restructured the business to succeed in this environment.

You joined Glanbia in 2006 so you’ve experienced the transition from the dizzy heights of commercial success in the boom to grappling with the downturn. When did you realise that your business had changed fundamentally in that period?

“I believe that the business strategy we’re deploying right now encompasses the reality that what began in 2009 for the FMCG business, the change in consumer behaviour in response to the economic downturn, was not a one-off. The Irish consumer has changed his and her way of shopping forever. I think we all realised coming into 2010 that it wasn’t going to be the same as before but it was the degree of collapse that no one really anticipated. No upturn is going to change that and as a leader in the business, along with my team, we have identified, accepted and built a strategy around it.”

In the last few years Glanbia has spent a lot of time restructuring the business which means that there are almost 400 less people working there than six years ago. That’s partly because of acquisitions and disposals, and partly due to cost structuring as well as a significant investment in a new plant and machinery.

Since the added complication for Glanbia of their cost base changing fundamentally with the flexibility of milk prices, they have focused on negotiating and maintaining a long-term pricing strategy on the input milk prices. This approach allows for more transparency – if not mitigation – and helps build a more sustainable supply system for dairy farmers.

Glanbia officially launched its new Nutritional Ingredients Plant at Belview in County Kilkenny

Glanbia officially launched its new Nutritional Ingredients Plant at Belview in County Kilkenny

What have been the biggest challenges you have seen in your business over the past couple of years?

A frightening reality check happened when the business realised in 2009, after considerable analysis of the marketplace, that the entire efforts of the competitive set of consumer milk processors in Ireland was a nil sum game – no money was being made by anyone and that was quite shocking.

“The big issue is margin – how can there be enough margin between supplier and retailers/food service accounts for business to be sustainable for both parties? I think there does need to be a better understanding of the sustainable balance of the margin for both sides.”

A lot of restructuring has gone on within Glanbia while trying to maintain relevancy, category expertise, scale and added value for retailers. According to Gordon, the conversation has moved a long way on the supplier side and for some retailers it has also, but he thinks it needs to become more focused around the discussion of what is a sustainable margin over a 3-5 year time period instead of a 3-5 month horizon.

Going through so much change as a leader, how has this changed your own style over the years and how do you know you’re adding value? 

“I try to always ask myself as a leader, “did something happen while you were there or because you were there?”.  If you are able to say it was because you were there then you’re adding value.

Taoiseach and Fine Gael leader Enda Kenny (with European Union Commissioner Phil Hogan outside the new Glanbia facility during March

Taoiseach and Fine Gael leader Enda Kenny (with European Union Commissioner Phil Hogan) outside the new Glanbia facility during March

“The style of leadership here is very open door and informal. We’re very performance-driven but we don’t have airs and graces. Using a rugby parlance, we’ve now got a shortened lineout…we’re very aligned and while there may be disagreements about how we do things, once we’ve established the end goal, that’s it, it’s done. Now that’s really powerful. And that’s a learning for me that I would continue to implement even if the world turned on its head and we were back to mid-00s conditions.”

Within Glanbia they have tightened the leadership team to a smaller number of people, so are much more nimble and effective in their response to business needs and end goals. When they made the latest changes to the leadership team they knew they were probably cutting it back a little too much but also knew they could always rebuild. Gordon explains that the best advice he got was to make a decision and implement it all in one go if you can. “The most important thing is to let people know what’s happening, keep them informed as much as you can and communicate clearly the long-term outcome of the decisions being made today.”

If you look at your own leadership team, what are the skills you look for in a top leader now?

“Resilience. Without question. But resilience isn’t just about developing broad shoulders, it’s about being able to work with colleagues and the wider team and trusting that everyone knows how to manage issues whether it’s within the broader business or at their own level.”

Gordon looks for total business acumen in his leadership team. Something he thinks we have been missing since pre-boom times is people with a much broader business knowledge; as functional expertise is not the same as business expertise. At Glanbia they are very keen on instilling knowledge of the entire business; from factory floor, to distribution, to process, to trade relations, to field sales, to marketing communications and to employee engagement. The best work they do is cross-functional, and this has been the other major learning for him along with tightening his team.

“A lot of the training we have invested in is around areas like resilience and around the softer skills of business and personal management.”

Has the always-on, 24 hour consumer world changed how you do business?

“Not for the dairy business as we’ve always operated in this manner – it never stops. Milk is a must-stock brand for all retailers. A retailer without milk is a lost sale and possibly one for a long period of time if customers lose trust in them. The supply comes relentlessly every day off the farm, and has to be produced and distributed very quickly to a very high standard. Milk then arrives safely to the store and whether it’s the milk agents or sales reps or the telesales team or any other Glanbia team members, it doesn’t happen by accident. Too many people outside Glanbia take all that for granted. ‘For grantedness’ is the biggest threat to the milk supply system. Look at NI and GB where no-one makes a margin in packed milk. No one cares or invests. We are determined not to let that happen here in Ireland and always on is one of the ways by which we work to ensure best efforts all the time.”

So the relentless nature of the business means that they invest in ongoing training to make sure that every cog in this vast wheel is turning effectively.  As testament to this, Glanbia maintains well over 99% customer service levels and the highest level of quality of anyone in the industry.

What has formed your leadership style? Did you have a mentor when you were starting out?

Gordon worked in the Confederation of Irish Industry as a researcher during and after college. One of his first employers there instilled in him a very strong sense of trust. “You were given the job based on your merits and you were trusted to come up with the right answer and to do it honestly and honourably.  That was very empowering in its own way.”

Then he worked in UCD with Tony Cunningham where there was a real sense of entrepreneurship. These two people imbued in him a strong sense of empowerment and an entrepreneurial approach. One of the pluses (and minuses!) of his style is that he loves the idea of trying different things – the why nots, challenging preconceived ideas. This turned into a positive during his time at C&C; his attitude was why can’t we become the biggest soft drinks player in the country, and it doubled in size while he was there.

Do you think that it’s tougher now for young people than when you were starting out?

“Yes, absolutely. I think people are taking longer to mature in business no matter what degree they have. I think that they don’t tend to look at the business in a holistic way, and it’s quite a rude awakening when you start having that conversation with them.”

For Gordon, good people will always be noticed and good does not necessarily mean the mark they got in their degree. Good people have broad business acumen; they are interested and eager to try different things. This means that their bosses will want to give them more work and responsibility, to see them thrive. The biggest single thing he looks for and therefore the biggest thing he advises people to do, is to think about the total business and not just their functional area.

What do you think is going to be the key to success of Glanbia over the next while?

“For the domestic market, we will continue to build the Avonmore brand and particularly its value-added formats such as Supermilk. Value nowadays is people getting more than they expect out of a product and the evidence of that is Supermilk. It’s not always about only ever-reducing price. That’s too simple and offers no future for supplier or retailer. Our job is to give people a really good reason for choosing and consuming a brand, and then they are prepared to support it and become loyalists. If we don’t they’ll choose the lowest common denominator. One of the things we stand by is that all milk is not the same and innovation is good for margin – for all elements of the value chain.

“The overall business growth strategy we have is twofold. It is to stabilise the core business as much as possible while developing a strong international platform for growth.”

The long-term stability of the core Glanbia business is a mix of growing certain aspects of it and continuing to right-size the rest of it. Based on their expertise in milk and cream and the experience they have with the Avonmore brand they are now developing an export growth platform. They have built a new factory near Lough Egish, developed connections in different geographies, and are now signing contracts. It is still early days but is viewed as the growth engine for them going forward. Exporting ready-made consumer products is not the same as exporting business-to-business products but Gordon is very encouraged by their initial progress.


Colin Colin was talking to Charley Stoney of The Alternatives group, which works with companies like Glanbia to unearth the best talent in commercial, customer-facing and marketing roles, and so help them develop the export growth engines of tomorrow. For more information contact Charley on cstoney@alternatives.ie.


 

 



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