TOUGH DECISIONS KEEP CHEESE BUSINESS SAFE
Keeping a long established
business secure means
keeping one step ahead of
the chill winds of recession.
Tessa Gates reports
JOHN Alvis heads a successful family cheese-making business that had its roots in a small Somerset farm with a capital of £200 but now has an annual turnover of £11m.
Alvis Bros has come a long way since 1935 when Johns father, John senior, took on a tenancy at Burrington and started to build up the dairy herds which were to be the backbone of the business. After World War II it became a partnership between John senior and his brother until 1960 when he bought his brother out
"When my father and his brother parted, I came in," says John, managing director of the company, which is based at Redhill, near Bristol, and runs four farms and has more than 1000 cows. Cheddar cheese, 2400t of it, accounts for 75% of the business, much of it sold under the Lye Cross brand. For the past four years Alvis has also produced an organic cheddar. This year 550t were made and demand is still growing. Double Gloucester is another line.
Cows, cheese-making and pigs – to utilise the whey – has been the formula for success.
"We have not changed the recipe much, we just kept a few more of everything and whatever money we have we have progressively re-invested," says John whose own sons came into the business in 1992. "We are in a super valley for growing grass, deep soils over clay – we dont suffer drought here. Its a bit of Gods gift, this land."
However, all businesses, no matter how well established have to take account of a wider economic climate and John is taking swift action to make his less vulnerable to outside recessionary forces. On the day Farmlife met him, he had just taken the decision to make seven employees redundant and to slaughter 1200 breeding sows.
"We will buy in pigs to finish as we need them, as long as the price is right and there is a profit margin. We are reducing our dependency on primary production," he says. "We also have a cohort cull for BSE coming up and we will not replace these 200 cows. Our 250-acre Stepstones Farm will go largely arable and we will let the quota, put the money in the bank and generate a better income from that.
* Crucial action
"It is very sad but we are taking a very tough line – it is crucial".
Cheddar output will be curtailed to 1800t to reduce exposure to borrowing due to the large stocks of maturing cheddar . "We will pull this back to 1300t which will release £1.5m," says John. "We are now selling some before it is mature, with the support of our customers who are maturing it themselves."
"We are a primary producer cutting back, service industries will feel the draught eventually. Our spread of the niche market and commodity products gives us some comfort and not having all our eggs in the pig basket helps us weather the storm," he adds.
Alvis Bros, who have always adopted a policy of farming in a way that they would be pleased to show the public, have also embraced all the animal welfare and quality assurance schemes. John is not sure if the schemes have been worth the extra cost. "I am sad to say it but I wonder what commercial value there is when, as with pigs, just a proportion of customers jump ship and break the market." At the end of the day John feels that commodity products will always be price sensitive, regardless of the way they are produced.
"In business you learn to meet the situation, be that a recession or depression.," says John. "As a company we have taken the serious decision to reduce our dependence on agriculture and food production by developing other income streams. As to whether my grandchild will make cheese, I dont know. I would not like to pontificate beyond the next five years."