Infant formula boss plans for growth

• Building a greenfield site
• Making infant formula
• Launch a product

I bought this factory in Kendal, Cumbria, from Heinz in June 2015, saving it from closure and protecting 88 jobs.

When I came in, we were producing Heinz-branded products three days a week. Now, we operate five days a week, and have launched our own infant and adult formula brands, which we sell to markets in Asia, north Africa and the Middle East. We have also managed to take on 30 new staff.

I grew up in north-east Ireland as the son of a farmer, and studied agricultural science for five years at University College Dublin.

Unsurprisingly, I have been in food all my working life, starting at turkey business Grove Farm, before stints at Rye Valley Foods, contract caterer Campbell Bewley Group, and meat firm Olhausen.

My big break was when I took on the role of chief executive at coffee roaster Java City in the US, where I built up 1,200 wholesale accounts over a five-year period, before returning home to take up a board director role at Aramark, one of the world’s biggest contract catering firms.

Following that, I did consultancy work and ran my own procurement and marketing business. It was at this point that I became aware of the big interest in Asia for infant formulas, which coincided with the melamine scandal in China.

I started researching and trading them, before trying to get firms to manufacture for me.

Building a greenfield site (Back to top)

I also looked into building a greenfield site, before coming across this opportunity. It took a whole year of negotiation for me to convince Heinz that I could not only be entrusted with its brand, but drive overseas sales.

Unknown to me at the time, Heinz was just about to announce its merger with Kraft – and its infant formula business was viewed as non-core. If they didn’t find a buyer for the factory, I’m sure it would have closed.

I’m glad I didn’t go down the greenfield route, as I now realise just how lucky I am to have inherited such an experienced workforce. They average around 20 years’ service each, and some have seen the factory change hands from its original owner Glaxo, to Farley’s, then Boots, and then Heinz.

I’m investing in improving the site, as there isn’t a week that goes by when we are not showing potential customers around.

We’ve replaced the windows in the room that contains our tinning line and sachet and box line, and spent £90,000 on a new guarding system.

Both lines run continuously – from 6am Monday to 6.30pm on Friday – on a three shift per day pattern.

The tinning line caters for two sizes – 400g and 900g – while the bag-in-box line has a degree of flexibility, allowing us to create different-sized boxes on demand.

Making infant formula (Back to top)

Making infant formula is an intricate process. Essentially, we have to turn milk into powder in a six-stage process.

To do this, we gradually add heat to milk in an evaporator to take the moisture away until it is 50% solid – effectively like cream.

From there, it goes into our infuser plant, which heats it up to a very high temperature, killing any harmful bacteria. After that, it goes through a homogeniser.

Then, the ingredients are added, and finally it goes through a spray dryer, which is four floors high and provides 300°C of heat, turning the liquid into powder.

Through this process, we can make around 2t of powder an hour.

After years of research into the infant formula market, I realised that the main brands had all removed the cream of the milk from their products, substituting it with vegetable oil.

Our Kendamil product stands out from our competitors in that it contains whole milk. Tests have shown that whole milk provides satiety and, as a result, children sleep better and sounder, and have fewer digestive issues.

Launch a product (Back to top)

We do have to add some vegetable oil, because the product needs some linolenic acid. But, we are continuing to research all the time, and we intend to launch a product with even more whole milk later this year.

We’ve managed to get Kendamil into Booths and some of the larger Iceland stores. The hardest places to get into are the UK multiples – we literally cannot get a meeting. It’s still early days for us though, and I remain positive.

The overseas market has been much more successful for us. In China, we signed a deal with a 100% state-owned ‘master-agent’ that has a sub-distributor with 1,500 sales people.

Thanks to my extensive research, I always knew that China – as well as other parts of south-east Asia – was going to be a huge opportunity. Kendamil is listed in 2,000 mother and baby shops in China, and we leave some margin for the distributors and store owners to merchandise the product.

It’s not all about infant formula though. In March, we will launch Kendalife, which is an adult nutrition drink. It’s a fortified drink that comes with 20g of protein per serve, which is all your body can actually absorb in one go.

I wouldn’t necessarily call it a sports drink, it’s more like a complete meal. It’s comparable to the likes of Herbalife, or Ensure from Abbot Nutrition – that kind of product.

The launch marks another step in the evolution of the company. I feel we are truly making history, because long after I’m gone, hopefully this company and the name Kendal Nutricare will be standing proud in Kendal.

Find out more about Ross McMahon’s vision for Kendal Nutricare as the company develops new products and expands into overseas, in our exclusive video interview.