Future Proof: Turning cheese into a maturing business

In 1995, Kevin and Séamus Sheridan hit on the bright idea of selling Irish farmhouse cheeses at the Galway food market. At the time, Séamus was a young chef and Kevin a student, so the venture was launched with almost no money but with the goodwill of cheesemakers who posted their products to the budding entrepreneurs in the west.

The brothers’ timing was good. The Irish farmhouse cheese sector was thriving and the Irish “foodie” had emerged as a discrete buyer willing to pay for quality produce.

The brothers started the hard way, getting up before 5am to build their market stall. They opened a shop in Galway in 1995, started selling at Dublin’s Temple Bar market in 1997 and opened a shop on South Anne Street later that year.

Today the company employs 45 people and has a turnover of about €5.5 million. About 70 per cent of sales are B2B with 30 per cent retail. Exports are about 5 per cent but growing.

"We didn't stopped running for the first two years," Kevin Sheridan says. "Then we were 'yes' people who took every opportunity and some of it worked and some of it didn't. Now our default position is 'no'. We make decisions more slowly, mainly because we have a clear vision of who we are and where we want to be. This has influenced strategy and decision-making within the business."

Until 2008 the business had been ticking along nicely, although Sheridan points out margins had always been tight.

“Good food costs more to produce, so margins are small and when the crash came we had little scope for cutbacks,” he says. “We had never been flathúlach – my personal transport for years was an old delivery van – so there wasn’t much fat to pare back.”

The company’s Galway operation was hit hardest by the recession but the whole business suffered. No staff were laid off but working hours were cut and there was a major shift in focus for the business.

Farmers’ markets, which had played a key role early on, were dropped because sales were down and they had become a drain on resources.

The brothers also reviewed their product portfolio, which had expanded into the broader deli market. They dropped products, decided to import less and focused instead on building relationships with more small Irish producers.

“We positioned ourselves as the bridge between artisan food makers and the public,” Sheridan says. “Many small producers are brilliant at making but not so good at marketing and distribution. They can also find it difficult to slot into the systems demanded by big distributors or large outlets. We allow them to be what they are but still get them on the shelves.”

Wisdom has it that a champion is invaluable for a fledgling business and the brothers found theirs in renowned chef Gerry Galvin of Drimcong House. "Gerry was very influential and very supportive. Supplying him was really the start of our wholesale business," Kevin Sheridan says. "We are at the very specialist end of a very specialist niche, so we have to have a wholesale operation. If we were like Neal's Yard in London, where they have a million potential customers passing through every weekend, we could survive as a retailer. But not in Ireland."

Sheridan says it was a tight squeeze assembling wholesale pallets in the tiny South Anne Street shop and before long it became clear more room was needed. With little spare cash, the Sheridans had to go where they could afford the rent. This turned out to be an old creamery building in Athboy and they moved there in 1999.

"We really wanted our own premises but the economic boom got in the way," Sheridan says. "In the end, we bought an old railway station between Virginia and Kells in 2005. It had great space but needed total refurbishment. We did what we could ourselves and project- managed the rest. We had no trouble getting the loan and got it at a low interest rate. We have our warehouse, offices, and a shop there and it can accommodate about 5,000 people for our annual cheese festival."

One of the ways Sheridans has grown is through launching its own products such as crackers (now its biggest selling product overall), chutneys and condiments.

“We don’t make everything ourselves,” Sheridan says. “There are really superb food producers in Ireland and we work with them. We’ve been approached many times by people offering to make for us and turned them down. We don’t want our label on their products. We want our label on our products.”

Sheridan says the biggest fall-out from the recession was bad debts due to customers going out of business.

“Over two years we lost a lot of money and kept going by the skin of our teeth. What saved us was our core retail business. People were still buying good cheese,” he says.

“There is a lot of truth in the old adage that turnover is vanity, profit is sanity. For us it’s all about building a sustainable business that provides those working in it with a reasonable lifestyle. It’s not about growth for growth’s sake. That said, employment is up slightly, Galway is bouncing back, Dublin retail sales are steady and our B2B has been on a growth curve for the last two years.”