We have a fantastic guest for this episode, Mark Taylor, President and CEO of Lactalis Canada! Great timing, we have so much to talk about, they just closed their deal for Agropur's Canadian Yogourt Business. We talk about his stellar career in the dairy industry - starting where it all begins, with dairy cows - his global experience in the industry, perspectives around the Canadian business and industry and the trends, innovations and path forward here in Canada
Welcome to the The Food Professor podcast episode 21, I’m Michael LeBlanc along with Sylvain Charlebois!
The Food Professor is presented by omNovos the digital customer engagement solution for grocery and restaurant marketers, helping you solve your customer’s most daunting questions: what should I eat today? Find out how you can get personal and grow sales with omNovos at www.realcustomerengagement.com
Well Sylvain episode 21 - I guess we’re an adult now! And we have a fantastic guest for this episode, Mark Taylor, President and CEO of Lactalis Canada! Great timing, we have so much to talk about, they just closed their deal for Agropur’s yogourt business, We talk about his stellar career in the dairy industry - starting where it all begins, with dairy cows - his global experience in the industry, perspectives around the Canadian business and industry and the trends, innovations and path forward in Canada
We jump right in….with #Buttergate - the past two weeks events, and the learnings and implications to the dairy industry and beyond.
We also talk about McCain's investment in vertical farming, and cricket farms for protein in London, Ontario.
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Thanks again to the folks at omNovos for being our presenting sponsor!
If you liked what you heard you can subscribe on Apple iTunes , Spotify or your favourite podcast platform, please rate and review, and be sure and recommend to a friend or colleague in the grocery, foodservice, or restaurant industry. I’m Michael LeBlanc, producer and host of The Voice of Retail podcast and a bunch of other stuff, and I’m Sylvain Charlebois!
Have a safe week everyone!
Michael LeBlanc
All right, welcome to The Food Professor podcas, episode 21. I'm Michael LeBlanc.
Sylvain Charlebois
And I'm Sylvain Charlebois.
Michael LeBlanc
The Food Professor is presented by omNovos, the digital customer engagement solution for grocery and restaurant marketers helping you solve your customers most daunting question, "What should I eat today?" Find out how you can get personal growth sales with omNovos at realcustomerengagement.com. While Sylvain, it's episode 21, I guess we're adults now.
Sylvain Charlebois
Yeah, exactly. We can vote.
Michael LeBlanc
I don't want to say, the podcast has reached, it's out of that adolescence and into adulthood. So that's, that's great. We got a great episode coming up. We've got Mark Taylor, President and CEO of Lactalis, I'll get that one right. And we have a lot to talk about with him. We're going to touch on on his implications, or his thoughts around this whole 'buttergate' thing. We're talking about his recent closure of an acquisition he did and all kinds of wide ranging stuff. Well, let's kick it off with with this 'buttergate'. So last episode, we talked about buttergate as it's come to known with this, this idea that the butter is harder than it was and there may be palmitic acids, as you would refer to them, in the product. So, you know, there's a lot of a lot has happened between the last podcast episode and this one. At a high level, you know, elevate this discussion to the strategy and policy perspective and your thoughts on that from, from your perspective, about what just happened and what implications or broader meaning it has in our food, in our food and our culture and all those things.
Sylvain Charlebois
Yeah, absolutely. Well, as you know, Michael, I always start with the consumer what's going on in people's homes when they buy products, and we still don't know for sure whether or not the characteristics of dairy products have changed. Of course, the Dairy Farmers of Canada have denied that things have changed, but they don't even have evidence to demonstrate that they haven't not changed. And that's really part of the debate, right. The science is where, now a lot of people are pointing fingers at people asking for the ban or changes and asking them where's the science? Well, it goes both ways really. There's, there's lack of science.
Michael LeBlanc
And that's one thing I wanted to bring up. I mean, in our last episode, I was listening to it over again. And what came out is is this call for more research, right. This call for, could this be the case? Should, we should invest in more research rather than definitive, right?
Sylvain Charlebois
There's a lot of research being done, but not the right research. And there's not, there's not that, that, that connection from both ends of the food continuum, farm gate, and plate. There's a lot of great work being done in animal science and plant science. There's some work being done in food science, but there's no connection. And that's really the problem. So some of the practices that are on farms are approved, legal things are great. But there's no consideration as to what may happen to the quality of food products at retail. And that's why food processors, dairy processors, and Mark Taylor and Lactalis are part of that group that have asked for the ban, 24 hours before it actually happened. And, I can understand why they were a lot of unknowns. But again, going back to the consumer, we actually have one of our field houses, Cattle, they actually surveyed 8704 Canadians over the weekend, from February 27 to February 28, asking them whether or not they saw any difference in the hardness and spreadability of their butter. So, here's the answer, 43.1% of Canadians who consume butter regularly, so twice or more a week, have seen a difference in hardness and spreadability. But here's the kicker that I thought was really interesting, of that 43.1%, 76.2% has never heard of buttergate. Which means that they weren't necessarily influenced by,
Michael LeBlanc
Influenced, yeah, yeah, yeah.
Sylvain Charlebois
But, they were asked for the first time it said, well, yes, since August 2020, in the middle of summer, they have seen a difference to a certain level, so two different levels. And so to me, when it comes to quality, that's a pretty high number. I mean, I would be certainly concerned. And going back to August of last year, when the British Columbia Dairy Marketing Board, issued a memo in October referring to some promises in August of 2020, dairy farmers knew that were there were some quality issues, but they opted to not do anything. So, the first memo we got from the Dairy Farmers of Canada two weeks ago, was we don't see anything wrong, to February 19 when they decided to strike a committee because they think there's something wrong. And on February 25, because I mean, buttergate was all over the world, they had no other choice. They had no other choice but to actually stop everything. And I think it was absolutely the right decision to make.
Michael LeBlanc
Well, I guess in in hindsight, you know, the right outcome was let's take, let's understand what's happening. Let's connect the dots and let's make sure protect the brand to protect the brand of milk. Protect the integrity of that brand. It's so important. You know, it's it's, you know, consumers don't understand the market dynamics, I barely understand them, let alone consumers, but they do know one thing is they think Canadian milk and dairy products are wholesome and, and good to eat any nick in that perception is is something that needs to be addressed, right.
Sylvain Charlebois
Yeah, absolutely. The concern that I have coming out of last week was that there is an investigation that is going to happen. But, let's not kid ourselves. It is, it is an incident investigation, led by a lobby group regulating itself.
Michael LeBlanc
Right.
Sylvain Charlebois
So this is important, and nobody's talking about this, but I have no idea what the outcome is going to be.The second concern that I have is that right now, when you look around everyone is weaponizing science based on a narrow narrative, they're out there. And I would say that a lot of dairy farmers are doing that right now, unfortunately. Because some dairy farmers have come to me saying "Sylvain, there's there's something wrong. We have you're right, there's something that we need to do". Absolutely, I was actually on the debate last night with dairy farmers. We had over 400 dairy farmers listening in live on Facebook, debating on buttergate. It was really great. It was, because it allowed people to vent. It allowed people to talk about know what the science is. And and there's a lot like I said, there's lots of science, but people are treating science like a buffet. Or, "This article actually fits my narrative, I'm going to use it and post it on Twitter", "Oh, that article fits well with what I think is going on. So I'll post it on Facebook". There's a lot of that going on it. And science is not like that at all. Science is really a collection of several studies together. It's a meta analysis that we need from different disciplines, a multidisciplinary approach. Again, lots of great work being done in dairy science, and genetics, and animal science as well. But that lack of connection is costing dearly to the dairy industry right now. Weaponizing science is just not helpful. It's important to keep an open mind in all this. And, I think, I mean based on some of the messages I'm getting, I'm either getting criticism or I'm getting farmers and people in the industry saying, I think we're onto something and this is not on anymore. The way we valuate how we market products is no longer applicable. I mean we have to change, because the consumer has changed palm oil, or a derivative of palm oil, whatever you want to call it, it's still from the same plant and a lot of people have issues with that. And it's about respect and consumer confidence and no food companies are immune to that including dairy.
Michael LeBlanc
Well and and I just want to touch on one other thing you brought up because it's, it's not the first time that science and different parties have been involved. I think of GMOs for example. As you know, there's a group of people who just won't take GMO products. You see many products that say "does not contain GMO". You talk to farmers and say listen, I couldn't get what I get out of the crops without some sense of modified product. And again, the cherry picking of the science on one side, left, right or the different, feels familiar. And of course we see it every day with COVID. Maybe we're in this environment of the of pick your, pick your study, pick your pick your science and and pick a side.
Sylvain Charlebois
In food, when you, when we're talking about moral contracts, or social contracts in food, whether it's genetic engineering, or in this case, animal feed practices, and to be honest I, it, this buttergate issue reminds me a lot of Mad Cow in 2003 when ruminant to ruminant feed was the was the question. I mean how we fed cattle essentially. And, cattle producers, a lot kind of cattle producers didn't see a problem. I mean, they were doing it for years. But clearly there was a problem because the science evolve. As soon as you start hearing things like "Oh, this is misinformation". "Oh, you're misleading people". "Oh, there's no science to what you're saying". That's a sign that you're dealing with a breach moral contract or breach of social contract. And there's a lot going on right now. But, I would say that there there was a lot last week, not as much this week. And the like I said, the concern that I have right now, is that is that we're giving the Dairy Farmers of Canada, the duty and responsibility to investigate itself. And I'm hoping that, that they're going to be supported by some political leadership, and I would include the dairy processors as well.
Michael LeBlanc
All right, well, listen, let's let's leave it there. I don't think it's the last we've, we'll talk about it,
Sylvain Charlebois
No, I never would have thought that that that would have been, I would have been in, say, Australia, or Britain, or Britain or, I say explaining to them the regime that we have in Canada with supply management. Because they from their perspective, they, they don't necessarily understand why buttergate is buttergate. But when you start explaining to them that really, in the end, consumers are endorsing a government sanction, quota system. We protect our farmers. We compensate our farmers. We pay more for butter, generally speaking. In return, all we expect is quality. And, and if that expectation is, is compromise, one way or another, it's a problem.
Michael LeBlanc
Yeah, it certainly went around the world. And I don't think, as I said, I don't think it's done. So, let's come back to it in another episode as the story evolves. And as the principles behind it, are probably kind of run through this podcast as well. All right, well, let's bring Mark on. Mark Taylor, the President, CEO of Lactalis, great interview, let's have a listen.
Sylvain Charlebois
Well, Mark Taylor, welcome to The Food Professor podcast. Not sure if you're used to doing podcast, but we're certainly glad to have you on our show. Welcome.
Mark Taylor
Thank you very much Sylvain. I can't say I'm used to doing podcasts. Everything's new these days. So looking forward.
Sylvain Charlebois
Well, first off, we'd like to hear more about yourself, who you are and how you got into this role.
Mark Taylor
Well sure, I mean, this is certainly my least favorite subject. And as you can tell from my, my accent that I'm not from Canada, but we'll come on to that a bit later on. So I guess I'm slowly unusual in that I started my life as a dairy farmer. prior to enrolling on Diageo's graduate training scheme in 1988. I milked cows in the UK, in Germany and in New Zealand. And, you know, my early career in the UK was with Express Dairy. Companies called Northern Foods and Unigate. And I was also part of a management buyout team at the Board of Business from Northern Foods in 1995, selling it to Dairy Crest, a large dairy company in the UK in 1999. Did a lot of the usual things in those in those businesses. Headed up business units. I was Group Commercial Director for Dairy Crest, as well as a Divisional Managing Director, and I headed up milk procurement for the company from 2009 to 2012. And was a member of one of the business's boards in Wexford in Ireland. Before joining Lactalis in 2012, I did some work on developing my M&A experience and my international experience via consulting roles. And I was part of a leadership team at Zenith International Consulting. And that was great because I got to travel extensively on a kind of a busman's holiday. I visited companies like Almarai in Saudi, Murray Goulburn in Australia, Dairy Partners Americas in Brazil. I did some work in Africa, and a lot of work in Ireland. And at the time, I also became non-exec chairman of a software company in the UK who are specialists in agri-food supply chains and quality compliance software. And that company was interestingly sold to Telus Canada in March of 2020. So for Lactalis in the UK and Ireland, I was Managing Director, I looked after seven companies which formed their interests in the UK and in Ireland. You know, typically accountable for total business performance, as well as working as part of, and leading teams responsible for everything from manufacturing, operations, buying, logistics, sales, marketing, innovation and R&D.In 2013, I was involved in drafting the UK's agriculture and food strategy. I worked alongside the government ministers responsible for leading that work. And you know, that was a really interesting period of time. Served as a member of the Sustainable Agriculture and Food Innovation platform. Government departments love these big titles. I also worked with the Technology and Strategy Board, now called Innovate UK.In terms of wider community interests. I've been lucky enough to work with Cambridge University's Natural Capital Leaders Program in the UK. I was invited to be a Fellow of the Royal Agricultural University 100 Club. And I'm also a past chairman of His Royal Highness, Prince of Wales, Rural Action Program, Dairy in the UK. And I served as a member of the board of Dairy UK, and dairy UK's Strategy Board. Got my MBA in 1999. Really interesting, a great qualification which kind of gave breadth to my formal education, which would have been difficult to obtain elsewhere. And the course supported the development of my interest in team leadership and business management. And then I get some nearer to up to date. So, I moved with my family, my wife and two sons plus our dog, to Canada in August 2018. To take on the role of President and CEO of what was then Parmalat now, Lactalis Canada,
Sylvain Charlebois
Lots of experience outside of Canada, and now you've been in Canada for almost three years. And you've gone through a lot of changes, even though you've been in the same seat, you've seen change. Certainly, of all the people I know in the dairy industry, I think you're probably the top person to provide us with an overall synopsis of the dairy industry around the world. And perhaps you could tell us, you know, what's your read of the Canadian dairy landscape compared to what you see in the rest of the world? in two minutes,
Mark Taylor
Full of lots of pitfalls. But, I would say, you know, I'm extremely positive about the industry here. And the opportunities that are ahead of us, of courseI am. You know, I've managed to close two large acquisitions since I've been in Canada. The first one was Kraft, Heinz natural cheese business, which was a $1.6 billion deal, which we closed in July 2019. And then, of course, more recently, the acquisition of Argropur's Ultimate Foods Business, which closed just two days ago. So we, you know, as an organization wouldn't be investing the kinds of sums that we are, if we didn't feel that, you know, there was a strong and positive future ahead of us. Our business in Canada, you know, is significant, where in terms of country turnover, we're ranked third within the Lactalis Group, which is, you know, is the largest dairy company in the world, I think we rank 13th in terms of Global FMCG. So not just dairy, you know, and the business here is is significant now, 4000 employees, 30 operating sites, 19 factories across across the country. And I think we ranked number four in terms of branded CPG. You know, I think I, you know, I think the future's bright. People always ask me about supply management, and what's my view, I'm an, I'm an ex dairy farmer, as I said, and I've seen all sorts of mechanisms and formulas for, you know, pricing and controlling supply and demand, you know, in, in the markets. And I think, you know, the thing to say is, these formulas are never perfect, per se, and need always to continually adapt. And certainly the farming organizations that I talked to in Canada, you know, we're, you know, recognize the need to continually adapt to the environment around them. You know, we obviously have to respond to the impact of various trade deals. And I would be very supportive of what farmers are seeking to do. Supply Management is a much envied model around the world. You know, and I think as, as brought lots of benefits to Canada, to the industry in Canada, and also to Canadian consumers. I know, you know, we often talk about things like milk quality, and the need to continually reduce the environmental impacts of our activities. Which are incredibly important subjects. And things like supply management, if deployed correctly, can be a significant part of leaning into those challenges.
Sylvain Charlebois
So, I'm sure you've heard about buttergate over the last few weeks. I, I'm absolutely curious to know about your thoughts on what do you think is going on? Is this, is this, is it a, is it symptomatic to a broader issue? Or is it a, is it just, you know, something that will just go away eventually and we'll, it will all move on? And what's going on do you think there?
Mark Taylor
So I think, you know, my position on this would be that, you know, I think we can see that Dairy Farmers of Canada's listened to the concerns that have been raised and has reacted to that. I guess, you know, I'm supportive of the position that they're taking to, as I understand it, deprioritize the use of certain ingredients in animal feed, things like palmatic oil. And I think, you know, that's, that's a step in the right, the right direction. You know, we spend, and so do farmers, a lot of time, care and attention, looking after the quality, and integrity of the products that we manufacture. I certainly know that, you know, it's, it's a bit like baking a cake, you know, any one of the three of us could be given the same recipe. But the cakes that we make would all be different, because we bring the ingredients together, and there will be subtle differences in that. So for our part, we were very heavily focused on the manufacturing process. We can't influence you know, what's what's happening at farm level. You know, we know that, you know, looking after the product, the raw material is key. You know, we use very specific equipment, and piping and transfer pumps. We bring knowledge and expertise from all over the world, and particularly from Europe and France, which I guess has been held up as examples of places that produce great quality, butter. That same knowledge is deployed in our operations here. And I can tell you that we do very, very extensive sensory testing. This is blind testing on all of our products. We have a very large R&D facility in London, Ontario, one of the largest of its kind in North America. You know, we're doing testing all the time. And we know, from those blind testings that our products perform, at the highest level, and, you know, would compare extremely favorably, favorably even, you know, in some cases, performing significantly better than others in the market. So I think it's incumbent on us as manufacturers to, to have those controls, those checks and balances in place. We have to be very focused on our consumer and follow the consumer and go where that takes us. So if consumers and customers are saying to us that they're uncomfortable about particular ingredients, whether those are from farm level or not, then we have to pay attention to that. And that will always get my attention. It is important that our products are authentic, I would agree that there is a moral contract. You know, our industry is, you know, predicated on, you know, natural, clean, nutritious and simple products. And we need to be focused on that. And certainly, you know, within our company in, in Canada, you know that is a core part of our purpose. We're a purpose driven organization. You know, we're here to enrich and nurture the lives of Canadians. So you know, anything that we can do that moves us closer to achieving that purpose, we will do,
Michael LeBlanc
Mark, let's get back to, let's talk about strategy for a bit and how you see strategy. You, as you mentioned, you've done two acquisitions, both fairly sizable. One just closed this week with the yogurt business. What's the, you know, when I will open my fridge door, I see a lot of your brand. I see you've got a famous brands that are just in my fridge and in the millions in the fridges of millions of Canadians. What's the, your take on the strategy? Is it a business of scale? Why would you go pursue more and greater acquisitions? Does it allow you flexibility within food service trade? And so give me some insight into why bigger is better in your category.
Mark Taylor
I wouldn't necessarily say bigger is better. So, you know, I think the phrase goes, "Turnover is vanity, profit is sanity". And I think, you know, we would be very supportive of having, you know, strong and vibrant businesses in our sector, of all shapes and sizes. You know, those, you know, smaller and medium sized businesses are absolutely fantastic. And they're a prerequisite to a healthy marketplace. You need them, because they're the people that are fantastic entrepreneurs. That are wonderfully flexible and creative. And these are things that we try and build into the way that we work, you know, scale is almost irrelevant. You know, it's, it's always about the people. And it's about the the processes, the way you generate ideas and move forward. And, you know, I'm constantly talking to, you know, smaller micro businesses as well as SMEs. In fact, I've had conversations with, with companies like that today. We would seek to provide support where we can, for those kinds of businesses. It would be easy for me to kind of sit here and say, well, as you know, if the market is consolidating, that's great, you know, because, you know, we're likely to gain differentially from from that. But in the end, that's a very kind of short sighted view, we need all of those different businesses, because it creates a stronger, more vibrant industry, and we would be very supportive of, of many, many smaller businesses, which we seek to work with.
Michael LeBlanc
Which, which tend to bring innovation to the category.
Mark Taylor
Yeah, I mean, innovation is absolutely critical. And we would be very ambitious in this regard. I believe that we innovate the most in our sector in, in Canada. But we're nowhere near where we want to be. We will continue to drive that hard. I think, you know, that's part of following consumers and going where that takes you. You know, you have to be constantly, you know, looking at consumers needs and wants and reacting to those. And we would do that right across our business.We're obviously in every part of the dairy category in, in Canada. So, you know, your, your right, I think, looking, you know, for trends, wherever they are, is, is really important. And, and also, if you're working in partnership with other smaller companies, it's important, you, you know, treat them fairly, and recognize, you know, what their needs are, as well. And in that way, you, you know, you create the opportunity for the whole to be greater than the sum of the parts.
Michael LeBlanc
I was looking on your site, and you've got, and I'm going to, this is actually a two prong question. You talked about following the consumer. And we're just talking about innovation. I'm looking at this interesting milk and oat product you've got and I guess the follow up question, tell me a little bit about that, and why you're blending those two things together? And then do you see oat and alternative beverages as an opportunity, or risk, or threat to your, to your core business?
Mark Taylor
So, I think everything's an opportunity. I mean, Milk N' Oats is one products. I mean, it's predominantly milk. But it's, you know, it's a, it's a really interesting product that's been received very well by consumers. I think, you know, we won BrandSparks', best new products awards, recently, as lactose free, free of gluten, free from preservatives. You know, so it's a very clean label products. You know, we are, you know, in the plant based sector. We've, you know, we've obviously got sensational soy. And, you know, we're about to bring coconut based desserts into Canada, under the, under the Siggi's brand. You know, and this, again, is part of following that consumer blend, you know, and I was or consumer trends. I don't think is, you know, it's not an either or, again, this is another, you know, you could kind of like, you know, ignore the trend, bury your head in the sand. But it's, it, you know, it's a trend that's here, consumers are telling us something. And we need to react to that.You know, dairy is, as you quite rightly points out a very big category with huge market penetration. And, you know, I passionately believe that it performs a very important role in the nutrition of consumers. And, you know, gram for gram, dollar for dollar, you know, is delivering on that nutritional requirement. And, you know, it's, it would be all well and good if you could afford it, or you had the time to, you know, to research it, and you happen to live somewhere where, you know, you could go down an alternative plant based route, but not everybody has that luxury. If you're, you know, either economically or geographically isolated, you know, dairy is a critical part of you know, delivering nutrition for all ages and stages of life. And this is, this is really important, because, you know, this is a, you know, a dietary solution from cradle to grave. You know, and take, you know, older people, you know, who struggles to get sufficient nutrition in their diet, you know, dairy, you know, forms a really important part of that balanced diet. In fact, you know, I was disappointed to see the revised nutrition guide, you know, prioritizing dairy, because, you know, you sometimes see unintended consequences. And if, you know, our important retail partners use something like that to reduce space planning in their stores, you know, you could see access and accessibility to dairy in, say, more remote locations, where there aren't the same number of shops to shop in, being reduced. And that could potentially have a negative impacts on the nutrition of Canadians. You know, which is something that would take, perhaps, years to crystallize but, but could be very significant in the future.
Michael LeBlanc
Are you going to follow the consumer to the doorstep? Do you see the milkman coming back? Door to door delivery, do you see a day in, well, we, you know, do you see a day when when this direct to consumer becomes a thing? We've seen dramatic increases in grocery commerce, thanks to the COVID crisis. It was already happening. But where we've moved ahead years. Do you, do you see participating in that directly? Or is that something you continue to participate with your partners? Are just kind of mulling about what that could look like.
Mark Taylor
So, that is a great question. And you may not know, but, but certainly early in my career, after I finished my graduate training, I was asked what I wanted to do within Diageo's operations and they owned a big dairy company. And I said that I'd like to learn the business from the ground up. So my first job was as a milkman. I actually delivered milk in, in around London, I managed a depo in Bishopsgate, just behind Liverpool Street Station, right in the City of London. You know, whilst out on my milk rounds, I got to see the Crown Jewels in the tower because I was delivering milk to the Beefeaters there. I was, I was doing a milk round in London when the Baltic Exchange was bombed by, by the IRA. So, you know, it's something that's very dear to my heart.And in you know, in the UK, the evolution was you know, that for years and years doorstep deliveries were declining by double digit numbers, 10, 12% a year as as volumes moved into supermarkets. That trend has reversed more recently. You know, it's a very nostalgic way to produce milk. You know, early mornings, you know, using electric milk flow, you know, with a very low environmental impact. Most glass milk bottles would make something like 18 tricks in a lot. So again, you know, that's not using plastic of any sorts, and you know, and it reduces environmental impact. So it's, so it is a more potentially sustainable model depends how you structure that last mile. And of course, the last mile is the big deal, isn't it at the moment.
Michael LeBlanc
Economic still matter, right?
Mark Taylor
Absolutely. And, you know, but you don't just have to deliver milk. You know, when I was doing the job we were delivering, you know, bread, eggs, you know, all sorts of things even you know, compost for gardens and turkeys.
Michael LeBlanc
Really, wow.
Mark Taylor
Yeah. Yeah, and, you know, and look at it now. You know, you've got all of these home delivery parcels, you know, coming from some of dot com retailers, you know, there's, there's a clear, you know, opportunity to look at that last mile and perhaps, look at ways to, to make it much more efficient. And, and much more convenient for consumers. And it is an interesting way on building on the connection with consumers. You know, especially in dairy, with such a high household penetration. You know the cows are being milked everyday.We're processing the milk everyday. We're delivering everyday. And when that delivering includes that connection with the consumer, I think that's really interesting and something we haven't taken real advantage of as an industry. And, it's still quite an interesting,interesting questions. So, yes, I would like to see it revived in some form. We're doing a little bit of that already from our Montreal facility. So we've one guy running a milk round out of there, we will move into the direct consumer space ourselves, and, and we'll be launching a couple of platforms within the next few weeks.
Sylvain Charlebois
The milk delivery person likely has a great future. I mean, there is a possibility there that distribution channels will change as a result of COVID. We haven't thought much about COVID. Just the last question. So what's going to be the lasting legacy of this pandemic affecting your business and the dairy market you think?
Mark Taylor
Well, in terms of our business, you know, we started a future thinking group, very early into the pandemic. So, as early as April last year, it became clear that, you know, things, we're never going to be completely the same again. You know, in times of global crisis, you know, you see things like technology advance at a much accelerated rate, you were talking about the impacts on home delivery, early on. So, we started looking at exactly that question and what could be what could be different now, I think, you know, that starts, I guess, quite close to home in terms of you know, how you're going to operate. So, how you're going to, you know, look after your people, your partners, your customers. You know, and that obviously, has been the initial part of our focus.But now we're moving into the kind of reimagine phase. So, you know, we will operate much more flexibly in the future with hybrid models. I don't, you know, I think we all understand now that there probably isn't a necessity for everybody to jump in their cars, and, you know, spend an hour commuting into the office every single day. Our people have been fantastic. You know, I'm really proud of what we've been able to achieve in our factories and our distribution operations. But also, you know, the, the office based community as well, you know, who, you know, continue to operate the business completely seamlessly, or more or less completely seamlessly. And, you know, continue to play our part in helping to feed the nation.I think digital transformation will continue to be a big part of the future. It's interesting, isn't it? At times like this, you know, when being connected is so difficult, we need to be even more connected. And I think, you know, I look at it, and I want people, you know, working in our factories, you know, a long, long way from where I may be in Toronto, to feel that I'm right there, you know, on the field with them. And I think that's critical. And it's critical for us to be able to have that connectivity in real time. So you were looking and, and bringing to bear, you know, those new technologies as soon as, as soon as they're available and deployable to get those into our business. I also think the need for us to collaborate is really, really important. I don't just mean within my business, I mean, across industries, with all partners, and with all stakeholders. We are definitely stronger together. And, you know, we need to understand that. There's much, much, much more to be gained by collaborating at every level in our supply chains. You know, to meet the immediate need, but also to meet the longer term requirements. You know, food supply and countries, now more than ever, governments realize, you know, is strategically important. And I think, you know, a situation like a pandemic reveals some of those weaknesses and, and points the way to the opportunities that lie in, you know, greater investment. And I think we do need more investment to be made in Canada's manufacturing sector, particularly in food in order for that supply chain to be more resilient, more robust, more flexible, more efficient, more innovative. Yeah, more of everything.
Michael LeBlanc
Well, it's, it's a great note to end our conversation on. I mean, describe innovation and agility, money, and the necessity of feeding the nation. So I really. Mark, I really wanted to thank you for joining us on The Food Professor podcast. It's been a great discussion both at the strategic level. And I can't imagine anyone better as a steward of a company like yours, starting right from the farm, right from the beginning. And so I wish you continued success.
Sylvain Charlebois
And, if I may Michael, I just want to add one thing. We and we don't do it enough. I do want to thank you, Mark, and your 4000 employees for doing what you do. I know the last 12 months have been very challenging for the entire food industry to deliver and keep Canada's food secure. It was indeed a challenging year, and you did very well. And the industry did well. And Lactalis did very well as well. So congratulations. And thank you so much for for doing what you're doing.
Mark Taylor
We appreciate that. Thank you very much for your your comments and your support.
Sylvain Charlebois
All right. Take care. Thank you for joining us again.
Mark Taylor
Thank you both.
Michael LeBlanc
Well, Sylvain, I know you knew Mark. This my first time meeting him is great. Such a depth of experience to like, like from farmer milking cows to running, what did he say? The third in their group, their Canada is one of the third largest regions buying, doing some great acquisitions. What a span of a career. But what, talk about knowledge that is just in his bones really, right.
Sylvain Charlebois
Oh absolutely. He's done, he's done the work. He deserves where he is now. And probably even beyond that. I mean, I he's probably one of the most highly respected person in their industry right now. So I was happy that he was very comfortable what was going on with, with the Dairy Farmers of Canada. I was happy, I was very happy also to hear from him that he supports our supply management regimes, but did recognize that they are tweaks that are required, and that's fine. And so very balanced. Very, and of course, when it comes to innovation, he's ahead of the game. I mean, his acquisition of Agropur's yogurt division, to me was a, was a coup. And I don't think it's going to stop here. I actually think that Lactalis is going to try to grow within the country. There's probably going to be a little bit more consolidation and Lactalis is going to be right in the middle of it.
Michael LeBlanc
Yeah, well, we'll keep an eye on it. And again, it was so great to have him on. It's, as you said, he's probably one of the more respected, if not the most respected in the sector. So great to have that voice on the podcast. And a couple other things I wanted to talk to you about that have happened. Reach for the sky, the sky's the limit., at vertical gardening, right, McCain's invests $30 million in a vertical greenhouse. I seem to remember we talked about this briefly kind of as a niche, could this be something something. It feels like a solution to, for countries like us that need to you know, become more food independent. Is that Is that how you see it? Is that is that you think why they made this now?
Sylvain Charlebois
Well, I mean, so when you think about McCain, McCain is when it comes to vertical integration, I actually think that McCain is probably one of the best in the country. They understand, I'll give you an example, last April, they had a glut of 300 million pounds of potatoes because restaurants were closed.
Michael LeBlanc
Right.
Sylvain Charlebois
Okay,
Michael LeBlanc
Right, right.
Sylvain Charlebois
What happened to the 300 million pounds, gone. They found a market. They were able to find a market and you can't do that without proper vertical coordination. But they are very heavily invested in certain commodities but they're also looking at that plate you know that, that food guide plate where we know half of it are vegetables and fruits. And they do see a future in that and and so McCain is I think trying to find its way into that business and why not focus on control environment agriculture projects. Like what we saw with with the, with the vertical farm announcement with GoodLeaf. I mean, that's, that's I think, so when I heard about the news, I wasn't surprised at all. I think it's a win win for everyone. GoodLeaf is a small company, wants to expand and scalability and that business is going to be a problem. I mean, and in order to scale up, you need a partner like McCain. So they're coming in at the right time, with the right leadership, having the right connection. And often in agribusiness, we take, we take the market for granted. In other words, oh,
Michael LeBlanc
Price taker versus price makers.
Sylvain Charlebois
Sobeys and Loblaws will buy our stuff because it's great. Well, not really, you need more than that. And a lot of, a lot of people who invest in processing learn, leared that lesson the hard way. And that's why I think partnerships, and actually Mark, Mark spoke about partnerships. That's exactly what I think the future will look like in in processing.
Michael LeBlanc
Well, from vertical integration to vertical farming, I like the way you connected those dots for, for the listeners. Let's talk about eating bugs, cricket, cricket. As a second farm opens up, $72 million dollar investment. Entomo, I think they're called. And what also intrigued me was there was a kind of a back and forth, look, we're a free range bug grower versus a productivity bug grower. I think there's another another grower in Pembroke. Yeah. what do you think of that? A great source of protein. A second big plant in London, Ontario. Is there is there a future for this business? Maybe it's just in pet foods for now? I know Loblaws brought out, brought a protein powder with Ruth Cricket Powder. I'm not sure it leapt off the shelf so to speak. But what do you think? Is it is it an export? Is it stumped for Canada? What's your perspective?
Sylvain Charlebois
I think it's a it's a mixture of both. It's really, I mean, there's no other cheaper protein. I mean, it's there's no other way and so if you are looking for protein, that's the way to go. If you, if the yuck factor didn't exist, it wouldn't even be a debate I think we would have bugs in any, in everything we eat. But we're not hardwired to like to eat bugs as human especially in the Western world. So, but I actually do see a future in, on the ingredient side really and so London is quickly becoming, becoming this this food hub again, which
Michael LeBlanc
I thought you're gonna say bug central which was a whole other different with my daughter Western University I was like ew, let's not make it bugs central.
Sylvain Charlebois
But there's a lot of investments happening like there's Corona Didn't Mark, didn't Mark said he, didn't Mark say he's Innovation hub was in London? What's, what is it about London? Is its proximity to agriculture to Guelph, and all these things? It's the capital of Southern Ontario. And Southern Ontario is you got this mosaic of commodities. You grow everything. Dr. Oetker built this state of the art facility a few years ago employing about 100 people making pizza. If you want to make pizza in Canada, when it comes to ingredient procurement. You want to be in a place like London. Because they grow most of the things you need to make a pizza is grown around, around London. And so it made sense to me when I, when I heard about that investment and for some. because Kellogg's closed a few years ago, and that was really a big hit for for London's economy. But since then, it's been all good. And I'm very happy for that community because really Southern Ontario has a lot to offer to the world.
Michael LeBlanc
All right, well listen, another great episode, we had a great interview with Mark and touch on a couple of issues. We'll be back next week with, or sorry, we'll be back next episode with a restaurant tour and Chef, the owner of the Richmond Station here in Toronto. Great conversation about the restaurant industry. We've been wanting to have this conversation with we've had it with different people in the ecosystem. And now we get to talk to one of Canada's top chefs. And so really looking forward to that. And thanks again to the folks at omNovos for being our presenting sponsor. If you'd like put your heard you can subscribe on Apple iTunes, Spotify, or your favorite podcast platform. Please rate review and be sure to recommend to a friend or colleague in the grocery, food service or restaurant industry. I'm Michael LeBlanc, producer and host The Voice Retail podcast and a bunch of other stuff.
Sylvain Charlebois
And I'm Sylvain Charlebois.
Michael LeBlanc
Sylvain, have a great week, be safe, and we'll talk to you soon.
Sylvain Charlebois
All right. Take care.