'Good' yoghurt

Good practise can mean good business

Yeo Valley is the fastest growing dairy business in the country - but it's had to work at it.

Being organic is not always easy.

The company's website has a section which puts the farmers point of view.

Have a look at the links in the lesson and think about their perspective on farm prices and other issues. Find out about organic farming and why Yeo Valley believes in its products.

Going for growth

All businesses need inputs but an organic company needs very special ones.

They can only come from farms which have been approved.

This can take a long time - as every trace of chemicals must have disappeared.

Yeo Valley couldn't get enough organic milk so it set about persuading farmers to convert.

As it's an expensive process, the company decided to help the farmers:

• it bought the milk, which wasn't yet organic, to sell to others
• it set a price for the year which guaranteed a profit for the farmers.

This helped the business too:

• farmers were encouraged to go organic
• the supply of milk became more secure

Growth can lead to growth. Making lots of organic yoghurt creates lots of organic cream.

When the company was small, there was not enough to market but as the amount increased, it developed a new product line and started to sell Yeo Valley Organic Cream.

Just think...

How did farmers going organic help the business?

Why is a secure supply of milk important to the business?

Why could the company only sell cream as the business grew?

The farmers' view discusses the price farmers get for their output and the effect it is having.

Put yourself into the shoes of

a. the farmer
b. the customer

and work out what you think.

Looking after the environment

Organic food is growing from a market niche into a market segment.

This is often the way that products grow.

Organic food has been around for a long time but in recent years it has become a much more important part of the food market.

Every supermarket now has a section of organic food among its fruit and vegetables and in its dairy fridges.

Yeo Valley has been producing organic yoghurt for nearly ten years.

To begin with, it was just a part of its sister company but the pace of growth was so fast that it quickly set up a dedicated organic dairy.

The company is not only concerned about where its inputs come from but looks after the environment in other ways too:

• the yoghurt is now packaged in a new type of pot with a thin plastic inner and a cardboard sleeve, so it can be split for recycling
• the dairy uses as little water as possible
• every lorry should carry a full load
• staff are encouraged to cycle to work

Just think...

How does each of Yeo Valley's environmental objectives help the UK to be sustainable?

How does a business you know look after the environment?

A win - win story

Many stories have winners and losers but the Yeo Valley story has winners and winners. As the company grows:

• the shareholders may make more profit
• there are more jobs in an area with little industry
• the farmers who supply the company receive a bonus each year when sales are good

The company also tries to sell its products at similar prices to other yoghurt. Organic food is often more expensive that non-organic.

Just think...

Who are the stakeholders of Yeo Valley?

How is the company looking after its stakeholders?

Why do you think it is important for a business to look after its stakeholders?

Work out how a business you know looks after its stakeholders.