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Last Updated: Tuesday, 2 December, 2003, 06:53 GMT
Robert Wiseman's liquid assets

By James Arnold
BBC News Online business reporter

Robert Wiseman
'Just a milkman' - but a rich one

Robert Wiseman is no pampered fat-cat.

To help out the family dairy firm as a teenager, he would get up in the pre-dawn chill to do the milkround. Now that he is managing director, he is still defiantly down to earth; "I'm just a milkman," he shrugs.

A millionaire milkman, however: Robert Wiseman Dairies, in which Mr Wiseman and his brother Alan still have a 54% stake, has grown with bewildering speed.

It now turns over more than 400m, employs 3,000 staff and controls 20% of the UK milk market.

And the company's most recent results were equally impressive: interim profits grew by 21% to 13.5m.

It is no surprise that earlier in the year he was named UK entrepreneur of the year by accountants Ernst and Young.

Brothers in arms

Mr Wiseman has an impressive legacy to live up to.

Dairy cow
The once-placid dairy business is hotting up
The Robert Wiseman of the company's name, the present boss's father, sold his farmland in 1947 to become the designated milk distributor for the new town of East Kilbride, on the southern fringe of Glasgow.

The Wiseman delivery schedule grew along with East Kilbride, graduating in the process from a horse and cart to electric milk floats.

But it was when brothers Alan and Robert came on board in the 1970s that the firm took off.

They took the view - revolutionary at the time - that doorstep deliveries were in decline, and that the future was in supplying retailers.

Spending up

This shift called for heavy investment in new production, packaging and distribution facilities, at a time when bigger rivals such as Dairy Crest and Express Dairies were letting their plants age gracefully.

Wiseman processing plant
Wiseman's modern plants should survive any capacity cull
Wiseman also poured effort into branding, creating a highly distinctive black-and-white cowhide livery that runs from its cartons to its delivery trucks.

And because supermarkets kept driving down prices, the firm was forced to seek growth through acquisitions.

Since the beginning of the 1980s, Wiseman has taken over 54 companies.

The billion-bottle boys

Little wonder, then, that growth rates have been spectacular.

At the beginning of the 1990s, the company sold less than 100 million litres of milk; this year, it surpassed 1 billion litres for the first time.

Dairy company shares
In 1994, Wiseman had 2% of the UK market; now, it has 20%, with more than half its turnover coming from south of the border.

The firm's shares, listed in London in 1994, have more than doubled over the past three years, far outpacing its rivals.

Wiseman has built a modern plant in Manchester, and then one in Droitwich, West Midlands, in 2001.

A map on the wall of Mr Wiseman's office charts the southward march, showing the business heading towards the big area it has yet to penetrate - the teeming millions of London and the southeast.

Liquid assets

Wiseman's success, analysts say, is the result of the firm's extraordinarily single-minded focus on its core business.

The firm has ruthlessly stripped away any distracting sidelines - tempting sources of added value such as cheese or yoghurt - from its business, leaving it only interested in selling liquid milk.

Wiseman's headquarters are still in the modest suburban farmhouse where Mr Wiseman senior set up shop; the firm does not even have a website.

"It's important to stick to what you know and not get sidelined," says Douglas Nisbet, managing partner in Scotland for Ernst & Young, which in October made Mr Wiseman its UK Entrepreneur of the Year.

"Since their shares have been listed, it's become especially important to be able to capture precisely what the firm is about in a couple of sentences."

Political problems

But the once-placid dairy sector is becoming ever more problematic.

Milk prices
First, "the milk business is hugely political," says Professor Donald McQueen, a specialist in the dairy industry at Glasgow University.

Imminent reforms to the EU's common agricultural policy are likely to cause a dramatic fall in UK milk production, shaking up Mr Wiseman's so-far amicable relations with suppliers.

And pressure on prices is pulling in several directions: farmers in particular are becoming more strident in their demands for a bigger slice of the profits.

Regulators are nosing around eagerly: Wiseman faces a probe by the Competition Commission into alleged price-fixing in a slice of its Scottish business.

Tightening up

Second, opportunities for growth are not as obvious as they were.

The market, says Nicola Mallard, analyst at Investec Securities, "is settling down into comfortable old age".

Cow
The sector is no longer a pot of gold
Milk demand is at best stagnant, and no one expects it to pick up in the conceivable future.

In October, Danish-based Arla won permission to take over Express Dairies, creating a group which controls just over one-third of the British milk market.

With Dairy Crest controlling another 24% and Wiseman on 20%, that does not leave a great deal of room for further acquisitions.

At Ernst & Young, Mr Nisbet warns that Mr Wiseman may face a challenge in keeping the business focused as it grows.

"You have to keep the culture and ethos of the organisation intact," he says.

Breathing space

But Mr Wiseman could still be feasting on the cream for a while yet.

The Arla merger is likely to see various bits and pieces come onto the market: the firms have pledged to cut their capacity by one-quarter, which will provide a steady stream of morsels for Wiseman to snap up.

Overall, the UK market has around 20% overcapacity in dairy processing: the fact that Wiseman, unlike its rivals, has modern, efficient plants means that it is unlikely to be pushed into cutting back production.

Overall, says Mr Wiseman, "there is no reason why we shouldn't have 30% of the market in the near future."




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SEE ALSO:
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10 Nov 03  |  Business
'Massive differences' in milk prices
04 Nov 03  |  Northern Ireland
Farmers protest over milk prices
16 Oct 03  |  Southern Counties
Families protest at milk depot
12 Oct 03  |  Devon
Fischler's farmyard revolution?
26 Jun 02  |  Europe


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