Jane Gray talks to Nestlé UK and Ireland’s CEO, Paul Grimwood, about the role of the world’s largest food group in addressing the issues of global food shortages on the one hand and a Western obesity epidemic on the other. With these concerns and a passion for fighting the UK’s corner within his organisation, there’s little time to ‘Have a Break’.
At 48, Paul Grimwood has plenty of experience squaring up to the challenges facing his industry. Always a student of commerce, Grimwood was born and bred in the confectionary manufacturing hub of York before really being bitten by a FMCG bug during an industrial placement with Mars while reading business studies at Huddersfield University. “I was convinced within a few weeks of the placement that fast moving consumer goods and their manufacture were what I wanted to be involved with from there on in,” remembers Grimwood.
Class of ’85
Ronald Regan advised the ambitious to “surround yourself with the best people you can find” and whether by accident or design this is certainly what Paul Grimwood achieved during his industrial placement with Mars.
Contemporaries with Paul on this training scheme read like a Who’s Who of FMCG and include Sainsbury’s CEO Justin King, Tesco’s commercial director Andrew Yaxley, Britvic CEO Paul Moody and the former CEO of Asda, Allan Leighton.
Recalling this crossing of pathways at Mars, Grimwood describes himself as fortunate for having this bar-raising set of peers during his formative years, but his experience and subsequent success speak volumes for the value of selecting a well respected and recognised graduate training scheme. “Perhaps I was naive at the time but I hadn’t expected the scheme to be such a breeding ground for a high calibre set of people,” he says.
It was a conviction which has never faltered, though forays into pet food and whiskey production added diversity and a different insight than might have been gained at giants like Mars and Nestlé. Working for the more modestly sized Highland Distillers, now part of the Erdington Group, is an experience Paul particularly values. “It gave me an understanding of the financial challenges of running a business which you don’t get exposed to in a large organisation,” he says.
“Government has put out some very clear messages on how it intends to cope with the challenges at hand, and as a businessman, I feel confident making decisions based on those messages”
Not only that, but Highland Distillers woke Paul up to the varying requirements of product development from company to company and product to product: “Coming to Highland Distillers from Mars, I don’t think I learned anything about commercial strategy and marketing, but I did learn a great deal about taking a mid and long term approach to product development. Whiskey is not whiskey until it is three years old and that climbs to eight or ten years for malt.”
Developing patience as a virtue with regards to product development and strategic planning became an obvious asset to Paul on joining Nestlé. “Short term goals are important at Nestlé but there is a much heavier emphasis on the mid and long term,” he comments.
Fine words and not unfamiliar ones for well established organisations with vast resources. But what about the average SME? “I don’t think longtermism is the luxury of a large organisation, though they may be in a better equity position,” asserts Paul. “If I am honest I think it is the luxury of a well run company. If a company, whether it is small, medium or large, focuses on the short term, they will quickly become tactical and find that costs escalate as they struggle to manage cash flow.”
UK food and drink manufacturing at a glance
- Food and drink manufacturing is the UK’s largest manufacturing sector
- The UK food and drink industry directly employs around 400,000 people in the UK
- The sector turns over around £76m a year and contributes almost £21bn to GVA
- Although food and drink manufacturing jobs are often perceived as low skilled, 38% of those employed by the sector in the UK are educated to A level or above
Grimwood says that all decisions at Nestlé are taken on a threefold assessment of “whether it is strategically right, will it deliver the benefits we need in the medium term and does it support what we call the ‘Nestlé model’ for operating in the short term.”
It’s a format which is applied globally, and like regional leaders in most multinational organisations, one that Grimwood must always bear in mind as he tries to promote the UK as an investment location for Nestlé and stand up for the broader concerns of British food and drink manufacturing. “My job has to be approached as a 50/50 split between being very passionate about the UK and understanding where the opportunities exist for Nestlé worldwide. I will lose credibility if I recommend an investment or an acquisition knowing full well that it would get a better return somewhere else.”
Nestlé UK and Ireland at a glance
- Nestlé UK and Ireland operates across 19 sites and employs over 7,000 people
- Over 70 of Nestlé’s brands are manufactured in the UK and Ireland
- Nestlé recently committed to investing £500m in the UK over the next three years
- Three UK and Ireland sites have now achieved zero waste to landfill: York, Dalston and Girvan
- Almost 90% of packaging for UK and Ireland products is now recyclable.A remaining challenge is the development of recyclable plastic laminates. “We are working with our suppliers on this,” says Paul Grimwood. “He who helps us solve the problem will win big.”
With the UK exhibiting relatively high energy costs, laborious labour regulations and being seen as a high tax jurisdiction, are Grimwood’s arguments that the UK is a key concern for Nestlé few and far between? Not at all he says. “I think the UK is a good place to do business. Nestlé has been operating here since 1886 and the attractiveness of the UK as a place to invest has improved recently, despite the economic environment. The government has sent out some very clear messages on how it intends to cope with the challenges at hand, and as a businessman, I feel confident making decisions based on those messages.”
The challenge is now on how to validate the confidence that led to headline grabbing sums of money being poured into Nestlé’s UK facilities. In the company’s full year results for 2011, released in February this year, £500m was pledged to developing UK sites over the next three years. The winning argument? “Nestlé sees the UK as a great place to export from,” states Grimwood. “At the moment we are exporting towards £300m a year to around 50 countries.”
And Nestlé is not the only food and drink organisation to find the UK offers big wins for food exports. In his concurrent role as deputy president of the leading sector trade body the Food and Drink Federation (FDF) and chairman of its Competitiveness Steering Group, Paul is proud to report that British food and drink exports (excluding alcohol) totalled a record £12bn in 2011 – up from £10bn in 2010.
So it’s a good news story all round? Not quite counters Grimwood. “These are record figures and should be celebrated but, marginally, we [the UK] are still losing share every year because other markets such as India and China are growing their ability to export food quicker than we are.” To tackle this Grimwood says there needs to be a one-stop-shop information point to make it easy for SMEs to get into the export game, rather than the confused landscape of advice from disparate groups in Defra, the Foreign Office and UKTI.
Instilling confidence in food and drink manufacturers to grow is of huge importance according to Grimwood. He says that food and drink, which is the UK’s largest manufacturing sector contributing around £20bn GVA and employing 400,000 people, has been disregarded by government in the past and completely overlooked by the previous administration in its assessment of growth areas in advanced manufacturing.
This faux pas has now been addressed and there are commitments in place between government and the FDF to see the sector grow 20% by 2020. Campaigns are already underway to increase the use of new automation technology in factories and boost investment in R&D.
This last issue of particular importance if UK food and drink manufacturers are to meet the needs of global consumers going forward – not in terms or product and brand development for consumer appeal – but in terms of survival. Paul grows serious as he says, “Food security is one of the big issues that the world must deal with – and it is a problem we are facing now, not a future scenario.”