Cheese spread and dip manufacturer Kavli has been on something of an acquisition spree. Already this year it has purchased Raisio’s non-dairy assets and last week announced the purchase of St Helen’s Farm. And the Primula cheese producer doesn’t appear to want to stop there. Michelle Russell caught up with Kavli UK managing director Paul Lewney to find out more about the firm’s ambitions and where it sees its next opportunity.

Last week, Kavli announced it latest deal – the acquisition of UK goats milk manufacturer St Helen’s Farm. The purchase represents a “major step forward” for the firm. While it will be Kavli’s first foray into goats cheese, the deal will allow the group to expand its presence in the UK value added dairy market – a key growth driver for the group.

“We’ve been looking to grow generally, both organically and through acquisition, and we’ve been on the acquisition trail for a wee while but without any success,” Lewney tells just-food. “Then the opportunity arose – having drilled down through various options – with St Helen’s Farm and we managed to secure the business. It was a decision we made about three years ago to expand [the business] with the Primula brand but also with acquisitions.”

Indeed, while Kavli exports to Ireland, Malta and Greece, the company’s focus has been on investing in the UK market. The group, which produces the Castle MacLellan pâté and Primula cheese and dips brands, invested GBP5m (US$7.5m) in an expansion of its Kirkcudbright facility in south-west Scotland last month.

But while the company also manufactures products for private label, it is the branded value added dairy category that Kavli sees the most growth potential in the UK. It is this area where Kavli wants to build its position further, and which Lewney says is the “main driver of growth” for the company.

“We’re going to grow the brands,” Lewney says. “We’re going to invest against the St Helen’s brand with an advertising and marketing campaign in the longer term … we’re not looking to actively produce private label in the [goats cheese] category. We believe there’s a key role for a branded player to help drive and to grow that category.”

Lewney says that rather than just saying it wants to grow its share of the cheese spreads market, Kavli has identified “broader” opportunities to grow through synergies in logistics and purchase, as well as new product development.

He adds: “There are also lots of opportunities with St Helen’s Farm where the company is not actually dealing with all the major multiples, where Primula does. So we’re hoping that we’ll be able to capitalise on our contacts and our knowledge of the industry to be able to take that forward.”

The most obvious driver of growth, however, would be further acquisitions – something Lewney suggests Kavli is quite open to.

“If the opportunity exists … we are keen to continue with at least one more acquisition. It’s really just about how soon that can come to life. It’s obviously down to the other owners rather than ourselves.”

And despite having just embarked on one deal, the managing director suggests a second acquisition for the UK firm this year might not be far off.

“We do [have something in the pipeline] … we have been in discussions.”

Lewney says the deal would be a “sizeable” one but declined to give a timescale for any potential deal agreement. “I really can’t say … it’s down to the sellers rather than us as the buyers. We are willing to move as soon as the sellers are willing to give us the nod. That could be short or medium term.”

When parent company, Norway-based Kavli Group, bought the non-dairy assets of Raisio in March, the firm entered into a new category. This, Lewney suggests, could also be an avenue of growth for the UK firm.

“The opportunities we’re looking at for the future may well allow us to move into new categories than the ones we’re currently in, so it’s a case of when we agree a deal with a company in the future, we hope that will give us new opportunities in different categories.” This, he says, would still be in dairy, but “broader based dairy”.

For the time being, Kavli will focus its attentions on integrating the St Helen’s Farm into the business, which Lewney says will not result in driving out costs.

It will, however, involve some new product development, utilising the assets and knowledge in goats cheese of St Helen’s – a first for Kavli.

The Vale of York-based firm employs around 40 staff and produces goats’ milk, cheese, cream, butter, yoghurts and ice-cream for the UK market.

While Kavli will look to innovate across its product portfolio, it is the yoghurt category in particular where Lewney sees potential for innovation.

“Obviously in yoghurts there has been a move into Greek and we’ve seen some major brands moving into that category. We believe there’s something within goats, within yoghurts and within flavoureds with goats that allows us to do something for the future. Also within flavoured [goats] milks.

Lewney appears determined that Kavli will succeed in its ambition to grow the business in the UK, whether that be organically or through acquisitions.

The managing director points to a number of “challenges” in the UK dairy market, including the “firming” of cheese prices and ensuring Kavli strikes the “right balance between being able to pass on [pricing] where we can, appropriately, and working with our customers to ensure we don’t damage the category”.

This, however, appears to do little to dampen Lewney’s enthusiasm for Kavli’s future prospects and its growth potential in the value added dairy sector.

“We’re not giving ourselves unrealistic or out of the world targets in terms of saying we’ll double the business in five years time, but what we’re hoping to do is see consistent growth of our core businesses – Castle McLelland, Primula and St Helen’s. Then we’re hoping to add on at least one, maybe two more businesses, which will hopefully make us continue to be attractive to our customers.”