When Alan Kingston and his wife Valerie started making yoghurt as a hobby in 1998, they had no idea the extent to which the venture would take over their lives. “We never had the intention of building a business from it,” says Alan “We just wanted to try a bit of milk processing at a home kitchen level.”

Located in Drimoleague in west Cork, Glenilen Farm makes very good yoghurt. So much so that the business has kept on growing and growing.

In the accounts filing for 2017, the company employed 39 people: the two founders, six people in accounts and admin, and 31 production staff and drivers.  The annual payroll cost that year was €1.2m, with the employers’ PRSI charge of €107,000 almost matching the €63,000 in pay and €51,000 pension payment that the entrepreneurs drew down as remuneration.

Year to year, the detail offered in the filed accounts for Glenilen Farm Ltd oscillates between glasnost and shutters down. Cashflow details were revealed in the 2015 filing but not in subsequent years.

In the 2016 accounts, there was detail on the company’s loan facilities, though that disappeared the following year. Piecing the jigsaw pieces together, it’s clear that the Kingstons have taken on substantial personal risk to maintain their venture’s momentum.

In Association with

In December 2017, the company’s total liabilities amounted to €2.7m and there was balance sheet cash of €127,000. Bank debt is not broken out in the 2017 filing but it stood at €785,000 in 2016. Accounts for that year detail six loan facilities from Bank of Ireland, all repayable monthly. A back-of-the-envelope calculation indicates monthly capital repayments of around €18,000. For reassurance, the bank has tied the couple to a €1m personal guarantee.

Until the end of 2015, the operating company had been renting the production premises from the Kingstons. The company paid €625,000 to buy the premises, and the founders appear to have lent back the proceeds to their firm; they were owed €384,000 by their company a year after the sale went through.

All of which goes to show that running a bigger-than-most Irish SME is not for the faint-hearted. According to Alan Kingston (47), Glenilen Farm has annual turnover in excess of €5m and is profitable. The business booked a profit of €6,000 in 2017 after a net profit of €284,000 in 2016.

Through last year, Glenilen Farm was developing the recently launched Live Yogi, a natural yoghurt range for children. “It makes sense for us to provide a kids’ yoghurt offering, thus ensuring the brand has access to the full family at point of purchase,” says Kingston. “Dunnes Stores, Tesco and SuperValu have been very supportive. We are using an existing line to fill the pots so no capex was required.”

Live Yogi joins the company’s extensive product range, which majors on live yoghurt with added fruit and also encompasses butter, cream cheese, clotted cream, cheesecakes, and even two flavours of cordial.

Such variety wasn’t on Alan Kingston’s mind when the Glenilen brand first started out. The 59-acre farm had been in Kingston’s family for generations and he took it over from his father in 1994. Shortly afterwards he married Valerie, who had worked in dairy science with UCC. “We realised the farm was too small to be viable and when we started a family the bills really started to mount,” Alan recalls.

“Valerie thought we should try making some yoghurts and cheese at home. We invested in a few saucepans, a Kenwood mixer and a Coca-Cola fridge that had been thrown out of the local SuperValu, and started making dairy products in our kitchen.”

Business Building

The Kingstons sold their cheeses and yoghurts at farmers' markets, where the products were well received, and in 2002 they built a production facility in the farmyard.

“At that point we decided to make a serious go at building a business. Our timing was good, as there was a market demand for foods with provenance,” says Alan. “We started delivering to nearby SuperValu stores and some independent retailers such as Donnybrook Fair. We tied down centralised distribution deals with SuperValu in 2006 and Tesco and Dunnes Stores after that.”

Those supply deals brought big changes for Glenilen. “We were now depending on consumers for pull-through and our dairy road manager for getting the products to market. At that point you’ve put in the work to build traction, so you can sort of take your hands off and let it fly.”

A larger production facility was built in 2008, which involved €2m investment. “We have invested at least another €2m since then,” Alan adds. “Apart from some Enterprise Ireland funding, which matched our own money, we’ve had no other outside funding, other than bank loans. That made things much more of a challenge.”

Glenilen goes through nearly two million litres of milk annually for its dairy products. The Kingstons have stopped milking their own cows and rent out their farm land to a neighbour. “We purchase milk from him and local farmers through Drinagh Coop. All the milk that we use comes from within a mile of the dairy,” Alan explains.

In the UK, Glenilen has listings with Sainsbury’s and Waitrose and 25% of the company’s revenue is sourced from sterling zone customers. With the pound soft against the euro due to Brexit factors, Glenilen’s margin on UK trade has been reduced.

“Our products have a short shelf life too, which means that customs delays are potentially a big challenge to us. It’s much more difficult for us to get traction in Germany or France, where paying over €1 for a yoghurt is quite significant. In Ireland and the UK, consumers are prepared to spend a little bit more on quality food than our European neighbours.

“For Sainsbury’s and Waitrose, we supply yoghurts with a fruit compote at the bottom. They’re sold in glass jars, which is important for us because there aren’t many glass-jar rivals in the UK. Consumers will pay more for a niche, high-quality product, but they won’t pay a lot more.”

Though the Kingstons have established good relationships with multiples, they have eschewed going down the route of private-label supply. “It’s more of a challenge to fill our factory capacity with only branded products but we want to focus on building our brand around provenance,” says Alan. “It’s not that we’ll never change this, but for now that’s what we prefer.”

Away from the exchange rate, Alan Kingston says that the main practical problem faced by Glenilen is finding staff. Sourcing workers locally is difficult, as many young people have departed the area for urban centres.

According to Kingston: “We applied for some work permits recently, as we had identified good people who had the right skills. It took three months for the permit applications to be processed, and they were turned down. Somebody in the government has got to wake up and realise that we can’t get the staff down here in rural locations.”

Transport limitations in rural Cork are another obstacle to trade. “In a way it’s like being born with a disability - you don’t really notice it because you’ve always lived with it.

"Luckily, there are big businesses in the area such as Shannonvale, Irish Yogurts and Clonakilty Foods. We piggyback off them in terms of transport and there’s also a network of logistics here that we can work off. It costs a little more but you just get on with it.”

In terms of running the business, Alan has responsibility for the financials while Valerie looks after brand and sales development. “We tend to stay out of each other’s way in the business,” says Alan.

“What keeps me going is looking out of our kitchen window every morning and seeing this monstrosity of a factory that we built. The few bob we owe to the bank also provides me with more than enough motivation to get out and do something.

Photo: Alan and Valerie Kingston