Vion boss aims for simpler business
As managing director of Vion Food UK’s poultry division, Peter Miller is responsible for a business that processes almost 20% of the country’s chickens. Philip Clarke went to meet him.
What has been your career path and how did you get into poultry production?
I’ve always worked in the food sector. After boarding school in North Wales, I started as a management trainee with Unigate in 1972. I left as a national account manager, when I moved to Anchor Foods at Swindon. Then, in 1983, I switched to the fresh produce sector, joining M&W Mack at Paddock Wood in Kent, which has since become Fresca. In 1996 I joined Del Monte, where I was managing director until 2008, before moving to Vion in September 2008, just after the takeover of Grampian.
What have been the main changes since that takeover?
We have changed the structure of the company considerably. We have made it less hierarchical and brought in new blood. Any large business tends to generate its own complexities, which adds cost, rather than value. Grampian was just like this, with a highly regionalised structure. We have made it a simpler business with a centralised structure – just one operations director, one agriculture director, one finance director. We try to operate it as if we have just one farm, just one factory, so we can say to our customers “this is how we grow it, this is how we process it”. It brings consistency.
You have also rationalised, with the recent closure of the Thorne processing site in Yorkshire. What was the thinking there?
Thorne was actually earmarked for closure six or seven years ago. That never happened, but since then the grower base has moved away. We were hauling chicken from far and wide, which was not good for animal welfare. There had also been underinvestment in the plant. We believed we could be a more cost-effective and efficient business by focusing production on our other sites.
How is the poultrymeat market shaping up and should the supermarkets be doing more to help?
There is no doubt that we are operating in a very difficult marketplace. There is mounting inflationary pressure affecting the industry, and it’s not just feed. Fuel and packaging are also costing more. At the other end, the consumers’ ability to spend money is being pressured. The retailers have tried to help a bit with recovering the higher costs. For example, on some lines they have held the price per pack steady, but put a bit less in the pack. They have not said “yes” to everything we’ve asked for, but neither have they turned a deaf ear.
And what about the longer term outlook?
On the bright side, people are still eating more poultry and the sector will be growing and still processing chicken for many years to come. The number of people is growing and they will want more protein. Chicken is a good converter of cereals, it does less environmental damage than some other food sectors, it’s easy to process, easy to move and easy to consume. I can only see the market getting bigger – both in the UK and globally.
How can you capitalise on that opportunity?
The challenge is to look for further ways to take cost out of the supply chain while continuing to add value. This is part of Vion’s new strategic vision. The UK market is hugely geared to breast meat which leaves us imbalanced. We are working with individual supermarkets to develop programmes whereby we can make better use of and add value to the whole carcass.
And what about the market for higher welfare chicken?
Out of the 3m chickens a week we process, just 40,000 are free range and 10,000 are organic – so it’s tiny. But we do supply each quality tier and are light on our feet. Things are changing and, what would have been high welfare 10 years ago is now the standard. For example, windows are becoming the norm in standard broiler houses in response to consumer demand for higher animal welfare, even though the jury is still out with regards to the facts.
Doesn’t this just add to the cost of production and make us more vulnerable to cheaper imports?
Correct. But European consumers have been brought up on a diet of higher welfare. It’s what they want. Some of the standards that apply to US chicken production just would not be tolerated here. Over the past few years, we’ve seen more and more retailers stating their “buy British” policy and that is more important for our industry than any form of border protection.
One way of cutting production costs would be to reintroduce Processed Animal Protein into rations. Is that something you’d encourage?
Consumers clearly have a problem with farm animals being fed to other farm animals. To gain acceptance we will have to take the emotion out of it. At some point in the future it will happen, but only out of necessity as the planet has to feed itself.
Your annual report makes a big deal about Corporate Social Responsibility. Is this just a buzzword or something of substance?
CSR is an important part of the way we do business. It’s not just about making charitable donations. It’s about managing our people. It’s about sourcing responsibly. We have programmes designed to limit our impact on the environment, such as using less water and disposing of our waste more effectively. We are mindful of food miles and have taken more than a million miles out of our transport over the past 18 months. It is also about creating long-term employment.
What are you doing to encourage new blood into the poultry sector?
The poultry industry is a great industry to work in and we have programmes to attract and develop high quality people. We are now into the second year of our graduate training programme. Having taken on six graduates last year we are now looking for another 10, some of whom will work in our poultry division.
What do you see as the greatest challenges facing the sector?
I think there are two big ones. The first is that the recent jump in input costs is here to stay. We therefore have to look for ways of utilising all of our crop in the most efficient way to maintain poultry as the best value animal protein.
The second one is volatility. We have to become more creative in the way we manage the supply chain, to make it more efficient and responsive. To do that, we need to invest, and to do that, we all need to make a profit.
What else is there in your life other than poultry?
I like to travel and to cycle. I also carry out my wife’s instructions in the garden at the weekend and enjoy walking our dog – he never answers back. I also enjoy a glass of red wine.
VION FOOD UK
Vion Food UK is part of the Vion Food Group, which has its headquarters in Eindhoven, Holland, and employs more than 26,000 people globally, with a turnover of almost €9bn. The three “home” markets are Holland, the UK and Germany.
Vion already had a presence in the UK before the takeover of Grampian in 2008, owning Key Country Foods and having a trading operation at Sittingbourne in Kent.
The business is now split into three main parts, of which pork accounts for about a half, and beef and poultry about a quarter each. Turnover comes to about €2.3bn and it employs more than 12,400 full-time staff, making it the sixth biggest food company in the country.
Farming is an integral part of Vion UK, which owns 187 of its own broiler units, accounting for about 60% of its total production, with the balance made up by contract growers. “I like a business where there is a mix of owned and contracted supply. It’s what I’m used to,” says Mr Miller.
Vion also has eight of its own hatcheries and, with four single species feed mills, it is the country’s second biggest producer of chicken feed. “We are arguably the most integrated of all the integrators in the UK. We have a stake in all the component parts.”
Slaughtering is based at four sites: Couper Angus in Perthshire, Sandycroft and Llangefni in Wales, and Eye in Suffolk – with further processing at Witham, Broxburn, Cambuslang and Basildon.
Vion is a partner in Tesco’s beef and lamb Producer Clubs, in Asda’s Porklink and Lamblink, in Sainsbury’s Woodland chickens and the Co-op’s Elmwood chicken. It is also a supplier of Fresh Scottish Chicken. According to its 2010 annual report, its goal “is to be the largest and most respected poultry company in the UK”.