Glynn Davis, our regular columnist and founder of Retail Insider sits down with Patrick Müller, CEO, Milk & More
Can you tell us about Milk & More and the business model?
We have a unique and disruptive business model, which meets the needs of consumers by delivering through the night in time for breakfast. Milk & More delivers British milk in reusable glass bottles and artisan groceries to the doorsteps of nearly 400,000 households and makes one million deliveries each week via one of the UK’s largest fleet of electric vehicles. The Müller Group acquired Milk & More from Dairy Crest in 2016 and identified an opportunity to reposition the business and safeguard 2,000 jobs from closure. We are soon to become an independent business within the Müller Group, the company’s heritage is in traditional milk round deliveries and it now offers a diverse range of farm shop quality produce as well.
What prompted you to develop the digital business (is it all ecommerce-led now)?
Consumer trends and business efficiency led us to become an e-commerce business. This gives us the freedom to build on our strategic goals of becoming more agile and being able to adapt faster to the changing needs of our customers. Milk & More is on a journey to transform into a “customer-obsessed” organisation. Market changes over the past 12 months have built on the positive momentum for the grocery delivery industry, and we are now well-positioned for future growth as an agile e-commerce focused company, with sustainability and premium products at its core.
How has it gone since you moved to digital?
Very well indeed. The company has invested over £40 million in building a new e-commerce platform and returned the business back to growth. For the first time in 40 years, Milk & More is also growing its market share. The investment and new strategy was to widen our offering and it is paying off, by bringing high-quality products to customers’ doorsteps up to three times per week by 7am.
What other changes have you introduced?
We now operate from standalone headquarters in Camberley, Surrey and we have appointed a dedicated management team to lead the business, as it continues to develop its e-commerce offering and explore strategic options to deliver its next phase of growth. The management team includes Andrew Kendall, formerly of Boots, as chief operating officer, Billie O’Connor, chief financial officer, formally of Selfridges Group, Cat Costigan, chief people officer, formerly Kellogg’s and Geoff Watson, chief technology officer, formerly of Marks & Spencer.
What challenges have you faced and what elements have you had to adapt?
The combination of the pandemic and post-Brexit measures did lead to a challenging environment for the business. Staff levels were affected as close contacts of people who contracted Covid-19 were forced to self-isolate. Also, many drivers we took on returned to jobs as HGV drivers after the pandemic. However, we still managed to make 95% of deliveries and we actively started recruiting drivers to mitigate future challenges. With widespread labour shortages, including an acute lack of lorry drivers, milkmen have been tempted elsewhere and agency labour has become less reliable, despite us introducing joiner and retention bonuses. We expect this trend to continue into 2022 and it is an issue that remains top of our agenda. We will address the issue by becoming a truly employee-focused business with a strong purpose. Many of our new starters are proud to work for a company with such a strong sustainability agenda.
Can you share some numbers – customer sign-ups, average spend etc.…?
In 2019 and 2020 we added 175,000 new online customers. Total revenue for the business was £186 million in 2020 – an increase of 20% since 2019. This has been driven by online customer numbers, which have gone up by 67% since 2019.
What are the biggest opportunities?
We are now well-positioned for future growth as the leading online DTC platform. We are excited by the options to grow our current customer base, but also we have a unique logistics business that is able to make 1.3 million deliveries a week. One of the options we are considering is making use of our fleet by adding a daytime and weekend delivery service, to supplement nighttime deliveries.
What sort of competition is there in the market?
Over the last three years, we have been growing in response to customers wanting eco-friendly artisan food from local suppliers. This longer, sustained trend has driven our business forward as consumers are starting to place more importance on knowing about where their food comes from and the supply chain. Competition is building as established players and start-ups are trying to operate in a more sustainable way and are beginning to offer local and regional product ranges. We don’t see any model that has solved the packaging issue though; with our return logistics model, we are able to generate 80% of our sales with zero-waste packaging. We also see that running an electric fleet needs local charging hubs. The switch from diesel to electric vehicles will be difficult and expensive for many of our competitors. Competition is also building in superfast hyper-convenience delivery. However, I have my doubts whether people are willing to pay a significant premium to get their groceries within minutes.
We are not just a delivery company: we have deep engagement with our regional producers and suppliers – a farm shop on wheels – and we have a genuine message on environmental sustainability, with our electric vehicles and our “message in a bottle” reusable glass. And customers seem to recognise and appreciate this.
What about the future – new product categories etc.…?
We are always on the lookout for delicious new products and ranges. Our mission remains focused on becoming the go-to farm-shop-on-wheels for consumers, encouraging people to eat well and live sustainably. Amongst our 200 products, we now offer oat, almond, soya and other plant-based milks as consumer habits and diets are changing. We are also actively looking to deliver recipe, meat and fish boxes with category-leading partners this year. We want to be seen as a leader in the circular economy and continue to reduce waste and food miles. With our electric fleet we already travel 14 million miles a year, or 565 times around the world, and our goal is to have a 100% electric fleet by 2025.
