North Highland Products Ltd/Mey Selections Brand

This case study covers the following points:

 

North Highland Products Ltd/Mey Selections Brand

 

Introduction to North Highland Products 

If someone had suggested to Danny Miller that he would be Chairman of a company that would return some quarter of a million pounds in premium payments to livestock farmers in the North of Scotland - he might well have been sceptical.  Nevertheless, in 2006 that is just what his company did. North Highland Products Ltd, the operating company for the Mey Selections brand reported a turnover of over £4.6 million in 2006 and returned over £240,000 in premium payments to farmers for their beef and lamb supplied.  The success of Mey Selections is, without doubt, down to the collaboration between producers, processor and retailer all working together.  The development of the Mey Selection brand clearly illustrates what is possible when everyone in the supply chain works together to capture a market opportunity.

Prince Charles launched the Mey Selections brand in August 2005 as part of the North Highland Initiative, which was established to boost the economy of the North Highlands of Scotland by promoting its produce, tourism and the built environment.  For its initial development period, North Highland Products Ltd was supported by an award of £71,000 from the Scottish Executive under its Marketing Development Scheme with some additional support from Caithness Enterprise and the Nuclear Decommissioning Agency.  North Highland Products is also funded by a small amount of money put in by an initial group of farmers and from an ongoing levy on producers to assist with administration and marketing costs.

For its Mey Selections brand, North Highland Products selects and sources only the highest quality farm and food products from within a hundred miles radius of the Castle of Mey.  The brand was set up to focus initially on the prime beef, lamb and mutton reared in the area, although it was anticipated from the outset that other quality foods from the region, such as fish, honey, jam, cheese and pork would be added to the range once the business was established.

The Commercial Drivers for Collaboration in the Chain

The North Highlands has a long history of quality livestock production, using traditional systems and smaller family farms or crofts. Beef breeds such as, Aberdeen Angus, Charollais, Limousin and sheep breeds such as, Cheviot, Texel and Suffolk predominate production in the region.  Chairman Danny Miller, who himself comes from a farming background, was very enthusiastic about the opportunities offered by North Highland Products but did not underestimate the challenges involved.  He said, “The primary commercial driver in the formation of North Highland Products Ltd and the Mey Selections brand was to add value to the red meat supply chain to the benefit of local farmers in the North of Scotland.  From the results of the initial feasibility study, it was clear that a collaborative supply chain arrangement was the best method to match top quality beef and lamb from this area with the demand from premium markets across the UK”. 

What are the Key Working Relationships and how are they Maintained?

Getting farmers to collaborate together to market their livestock was a crucial first step.   Farmers tend to be very traditional and independently minded by nature and are often sceptical of new initiatives.  It was important therefore, that potential members understood the vision and how working in collaboration would deliver real benefits.  The overall aim was to provide a consistent and premium market for top quality livestock.  With this in mind NHP made it as easy as possible for new producers to supply the Mey Selection brand - either directly to the processor or through an agent.  As a farmer owned and controlled business, its philosophy is to build long-term relationships with its producer members based on the principles of trust, commitment and a shared vision.

To support the image and quality of the Mey Selections brand all members must be certified as farm assured.  In addition, only livestock that is born and reared for a minimum of twelve months in Caithness is eligible to enter the Mey Selections supply chain, even if it has subsequently been forwarded to specialist finishing farms within the 100 miles radius.  Mey Selections products, as the name suggests, are selected from farms where stockmen have daily contact with their livestock, ensuring the highest welfare standards.  The high health status of the region and predominantly grass diets results in a high quality product that is traceable back to the individual farmers.  Mey Selections beef is given extra flavour through the skilful processing techniques of dry ageing and slow chilling during maturation.  The result is some of the finest Scotch beef and lamb available.  Mey Selection rib beef was awarded best fresh meat product in the national 2006 Supermeat Awards. 

What are the Collaborative Business Propositions and Targets Agreed by the Chain?

North Highland Products does not take bulls for slaughter and only cattle from the higher MLC carcass grades are given a premium over average market prices. Producers are rewarded for good carcass conformation. Ideally cattle with carcase classification grades of R4L or better are sought, attracting a premium of around 10 pence per kilo deadweight.  The price paid for animals falling outwith those grades is reduced accordingly. North Highland Products has also formed a Mey Selections Producers’ Club to help breeders and finishers link together to promote best practice and sharing of information.  To help farmers produce animals that meet the desired specification, North Highland Products is currently establishing a members’ only area of its web site.  The intention is to allow producers to  pick up the grades of the cattle they have sold that week and benchmark them against the averages of other producers. The company also distributes a regular Mey Selections newsletter to producers and holds one-day workshops at Dornoch to demonstrate to farmers how carcass classification affects efficiency in processing.

Lamb production is also nearly all year round.  The different breeds raised in the area, and the local topography, means that there is a spread of lambing dates, all of which combines to give a steady pattern of finished lambs available for market.  This allows North Highland Products to market lambs over a longer period than would normally be the case.  Finished lamb production builds up to a peak in September and October.  Mey Selections lambs are killed and processed in Dornoch in the North of Scotland to minimise travel.  North Highland Products offers various breed improvement and health programmes as well as sheep disease monitoring.  Good carcass grades that meet the highest speciation attract up to 15 pence per kilo deadweight in Mey Selections premium.

Examples of the Results of Collaboration

The pricing system used by NHP follows the fluctuations in the market with the substantial Mey Selections premium added thereafter.  To date, the 150 farmer members have regularly traded on average, over 150 cattle and c. 700 lambs per week.  The 5,000 or so cattle traded over the first year made a premium over the Scottish average price of typically £37 per head, and £3 per head for lambs – clear evidence that producer members benefit from taking a collaborative approach. 

Building a strong working relationship with its collaborative processing partner Dunbia was also seen by North Highland Products as a vital second step in the supply chain. Dunbia is a meat-processing firm based near Dungannon in Northern Ireland and until 2006 was known as Dungannon Meats.  The firm was founded by the Dobson brothers in 1976 as a butcher’s shop and later started packing meat for local retailers.  Over time the group has expanded to supply international markets and UK supermarket chains, including Sainsbury's, Asda and the Co-op.

Long Term Thinking and Mutual Support

NHP and Dunbia work closely with producers to forecast production so that supply and demand can be kept in balance and to ensure the availability of livestock of the correct specification.  Forecasting is currently carried out using a combination of last year’s throughput and a farmers’ survey of available stock.  As evidence of its commitment to the Mey Selections brand, Dunbia invested over £100,000 in 2006 in its processing plant in Dornoch and created about 20 jobs.  This investment was used to expand the onsite refrigeration facilities and to create a new dedicated boning facility for Mey Selections meat.  In addition cattle slaughter options were made available in both Inverurie and Kirkwall to provide more localised entry points to the Mey Selections supply chain.  This has the added advantage of reducing food miles and ensuring better meat quality in that the animals will not be so stressed by long periods of transport.

As Gary Cronie of Dunbia emphasised “Premium sales must be matched with premium quality production.  To realise the potential of Mey Selections’ products, there is an absolute interdependency between farmers, North Highland Products and Dunbia.  There can be no doubt that the quality of the beef and lamb used for Mey Selections is second to none, and is critical to the brand’s performance in the marketplace.  At Dunbia our maturation and processing methods are designed to ensure the natural quality of the meat is preserved for the consumer to enjoy.” 

The third major link in the collaborative supply chain is the retailer, J Sainsbury.  Sainsbury’s is a well-established retail multiple that prides itself on providing a good quality food range.  Since starting to retail Mey Selections as part of its “Taste the Difference” range, Sainsbury’s has increased the number of stores that now stocks the brand to 98 stores.  Sainsbury’s has worked together with North Highland Products and Dunbia to grow sales in line with available production. As part of its commitment to the brand, Mey Selections beef and lamb was the focus of a special training day held in May 2006 in London for the company’s meat buyers, counter and fresh foods’ managers.  About 30 of 50 Sainsbury’s senior counter staff, buyers and food technologists heard Justin James, the Company’s category manager for meat, say that the supermarket is “right behind the Mey Selections brand”.

Innovation, Value Add and New Product Development

New product development and carcass balance are high on the joint agendas for both North Highland Products and Dunbia.  In December 2006, Mey Selections won the best New Beef Product Award for its recently launched Sainsbury’s “Taste the Difference” Mey Selections meatballs.  “The Mey Selections range is the best of the best.  As a major retailer, it is exclusive to Sainsbury’s and we are full square behind it.  The beef and lamb produced by Mey Selections is all about creating differentiation for Sainsbury’s customers,” said Justin James.

Both North Highland Products and its collaborative partners are fully committed to developing its portfolio of products that will further enhance its brand position in the market.  With local cheese and whisky already added, the company forecasts that demand for its increasing range of products will grow significantly through 2007. 

Conclusion

Reflecting on its performance to date, Chairman Danny Miller is very pleased at how North Highland Products and its Mey Selections brand has performed and looks forward to building on its reputation.  As Danny pointed out “Collaborative working has been one of our key success factors.  Our supply chain partners have helped us identify new markets, and with them and perhaps some new ones, we anticipate that demand for the Mey Selections range will continue to grow significantly in the years to come. For anyone interested in supplying us with quality beef and lamb, or in buying our products, please keep an eye on our website www.mey-selections.com ”.

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