“I love food,” declares Dalton Philips, chief executive of listed convenience food group Greencore.
“I love cooking it, I love making it, I love buying it, I love eating it. I’m a total foodie,” he adds, with a big smile and a light sprinkling of exaggeration.
This is a good thing though, given that he is leading a company that is the world’s biggest maker of sandwiches (779 million a year). It also produces 423 million Yorkshire Puddings annually, 127 million chilled ready meals, 47 million soups and about 30 million quiches.
We are sitting in a meeting room at Greencore’s Manton Wood facility, located near Worksop in the middle of England. As we speak, Philips, who looks fit and trim (he’s run 19 marathons), demurs from the fine spread of Greencore’s food products laid out for our chat.
Manton Wood is the largest sandwich making plant in the world, with an army of employees clad on the factory floor in white lab coats, hair nets and special shoes as they assemble its vast array of sandwiches and wraps. Built in 2002, it sits on 9.6 acres and ships 190 million sandwiches a year to the likes of the Co-op, Asda, Boots, Morrisons (where Philips was CEO until 2015), Aldi and Lidl.
It’s a modern facility that stores a vast array of food ingredients, mixes them as required for the product lines and, in the case of the sandwiches, assembles the ingredients on numerous hi-tech production lines.
Some of the lines have up to 20 staff involved in repetitive, manual roles. For example, they place tomatoes in the four corners of a slice of bread for the BLTs, or add a dollop of coleslaw to every second wrap on another line using a traffic light system that indicates when they have just the right amount in their hands, or simply place the cut sandwiches into their packaging before the machine seals them up and sends them on their way to be packaged and later picked for retail customers from a nearby warehouse.
So how many Greencore sandwiches or ready meals would Philips eat each week?
“Too many,” he says. He professes to liking the chicken and bacon wrap and chicken and bacon sandwich, two of its best sellers. For the record, cheese and onion is its best performing sandwich combination.
‘I grew up in food. I used to get dropped to school on an egg van; we delivered eggs every day to all the different supermarkets’
— Dalton Philips
“Dare I say it. I love our lasagne,” he says. “But, you know, I shouldn’t be eating lasagne every day.”
Headquartered in Dublin, Greencore’s production is entirely based in Britain and the company is listed on the London Stock Exchange having quit the Irish market some years ago. In the year to the end of September 2023, the company generated revenues of just under £2 billion (€2.34 billion).
[ Greencore revenue dips but company on track for full yearOpens in new window ]
As well as leading Greencore, Philips also describes himself as a farmer, with 155 acres at his home in Glenealy, Co Wicklow, where he grew up as a child. It’s mostly used for tillage in partnership with a local farmer, but is also home to sheep, chickens and geese, while his sister also breeds event horses on the site, he says.
His grandfather, David Philips, was an American entrepreneur who developed the ziplock, an innovative system for sealing plastic, still in use today. The sale of that patent enabled him to make a permanent move to Ireland, where he bought Ballyfree House in Glenealy and set up Ballyfree Farms, a brand that still exists today.
Dalton’s father, Tim Philips, who was born in London, later developed the business, which became the dominant supplier of fresh eggs to the Dublin market. Ballyfree diversified into turkeys and convenience foods before the business was sold in the 1980s.
“I grew up in food. I used to get dropped to school on an egg van; we delivered eggs every day to all the different supermarkets. And then they got into turkey production and making salami, some frankfurters and sausages and all that added turkey meat.”
Philips says the reason he went into retail rather than manufacturing as a career that “it was so difficult being a manufacturer” and there was a constant worry about cash flow in the family business.
Philips joined Greencore as CEO in September 2022 after five years leading the State-owned Dublin Airport Authority (DAA). He succeeded another Irishman, Patrick Coveney.
The Greencore that exists today grew out of the original State-owned Irish Sugar business, which was privatised more than 30 years ago. Philips says he always admired it from afar but when he took over Greencore it was in the doldrums, after four years of “absolute carnage” resulting from Brexit (it no longer exports sandwiches into the Irish market because of customs delays), the pandemic, Ukraine and the subsequent soaring inflation and cost-of-living crisis.
Some €200 million worth of inflationary costs went through its profit-and-loss accounts in both 2021 and 2022, some of which couldn’t be passed on to retailers. Its profit margin went from 7 per cent to 4 per cent.
Before Philips arrived, a decision had been made to reduce the number of business units from five to one, but the transition hadn’t gone smoothly and the company’s “profitability was dropping”.
A year ago, Philips decided to remove 15 per cent of management positions, which amounted to 350 roles in the business. The saving was £9 million a year. “It’s a material saving,” he adds.
‘... what we’ve been doing this last year, which is really against our DNA, is been saying to customers, ‘if you’re not prepared to pay the input costs we are having to absorb, we’re just going to walk away from that business’
— Dalton Philips
Philips also decided to look at all the customer contracts that Greencore had, to assess their value and profitability to the company. “The DNA of Greencore was always to win a contract, hold a contract and don’t say goodbye to a contract. You hold it at any expense.
“And what we’ve been doing this last year, which is really against our DNA, is been saying to customers, ‘if you’re not prepared to pay the input costs we are having to absorb, we’re just we’re going to walk away from that business’.”
He cites a £40 million ready meals contract with Asda, where Greencore walked away. “That was really a seminal moment for this organisation, because we hadn’t done that before.”
Others were shed, too, including some small contracts (that proved to be loss making) picked up during the height of the pandemic, when some competitors were going bust and food-on-the-go operators such as Greencore were struggling as a result of people working from home during lockdowns.
“We’ve shed 10 contracts in the last year,” he says.
In other cases, it went to its retail customers and pressed the case for price increases, which he says succeeded because of the “sticky relationships” that Greencore has with many of them and because of its “quality and innovation”. And presumably because of its dominant position in the market. It has a 60 per cent share of the British sandwich market, for example, and is number one in sushi and Yorkshire puddings.
Greencore has 150 people in product development, looking at ways to freshen up its portfolio of sandwiches and ready meals, and developing new on-trend iterations.
Stabilising the business was part of what Philips calls Horizon 1, the first of three stages to put it back on the path to growth.
Philips has now moved on to Horizon 2, which involves rebuilding Greencore’s profitability to its pre-pandemic level by 2026. In the year to the end of September 2019 (its last full year of trading before Covid-19), Greencore’s adjusted operating profit was £105.5 million. In the year to September 2023, it was £76.3 million.
He’s off to a decent start on that front, beating consensus adjusted operating profit forecasts for last year of about £70 million. Philips characterised Greencore’s performance in the first quarter of the current financial year as being off to a “good solid start”. The figures, published on Thursday, showed revenue declined in Q1 by 4.7 per cent but this was largely due to the sale of a business unit and exiting certain unprofitable contracts.
He says the number one focus on rebuilding its profitability is around “commercial excellence, really working with the retailers to ensure that we’ll be compensated”. Number two is around managing its costs base. He notes how the UK’s move towards a national living wage will add about 10 per cent to its £450 million annual bill for labour.
There is also a push towards further automation. One example demonstrated to me on the factory floor, involves the machines being able to cut and stack the sandwiches for packaging without human intervention, taking two employees out of the production line. Increased automation also opens up the possibility of a higher throughput from its factories.
It’s a relatively low-tech solution but makes the process more efficient and less labour-intensive. About 9,000 of Greencore’s 14,000-strong workforce are involved on production lines.
Philips says increased automation will replace a lot of those roles but declines to put a precise number of it, and adds that some of the staff will be upskilled into higher-value roles within its factories with others redeployed to facilitate the growth that Philips has baked into Horizon 3, the final stage of his strategic plan.
Greencore is the dominant player in the UK sandwich market but Philips still sees growth opportunities for the business. For example, it doesn’t sell any sandwiches or sushi to Tesco or ready meals to Aldi. He also sees opportunities in the breakfast market, where Greencore is a small player.
There’s also population growth and he notes how more people are back working in offices, which is a traditional customer base for Greencore’s retailers. In addition, he sees potential in other channels, such as food service and catering and even “new countries”, a little further down the track.
Ireland could potentially be one of those markets, he says. Greencore’s head office is in Dublin but it no longer makes food products here.
“Yeah, I’d love to be back in Ireland. I think it would be terrific. Our heritage is Irish and we’re proud of our Irish roots. It’d be great to be back in the Irish market. How and when I don’t really know.”
‘I go around our factories and what surprised me was... when we make soups, it is just like your grandmother was making soup, they’re just in these enormous vats. So in goes the onions, you know, in goes the garlic’
— Dalton Philips
For now, the focus is on the British market. “My instinct is, you’re better off doubling down here in the UK as a first step, because we’ve got all these sticky relationships, all this infrastructure and all this knowledge, how can we sweat it harder.”
Given its portfolio of ready meals, and with ultra-processed foods in the spotlight, how does Greencore shape up in terms of healthy eating? Philips cites its “incredibly healthy” salads, sushi, soups and sauces. “You saw the sandwiches, they’re not much different to what people make at home,” he says.
“I go around our factories and what surprised me was... when we make soups, it is just like your grandmother was making soup, they’re just in these enormous vats. So in goes the onions, you know, in goes the garlic. There are huge parts of our category which are just massively healthy, don’t even need to discuss that.”
Really? Industrial-scale soups usually have a high salt content for flavour but Philips insists that’s not the case with Greencore’s.
A colleague who sat in on the interview chips in that the company has reduced the meat content of its lasagnes and bolognese dishes without “substantially changing the product”.
[ Greencore rally brought to a halt by sushi slump and rising wagesOpens in new window ]
Philips acknowledges that ready meals, which are 20 per cent of its business, are in the spotlight as ultra processed foods but insists it has the ability to respond to a market demand to remove or reduce emulsifiers and additives that typically prolong the shelf life of products. This would shorten their shelf life but Philips says Greencore has the scale and innovation capacity to respond to that move in the market.
“We can react to that because we can get it in quicker. And therefore its competitive edge.”
Typically, Philips spends Mondays in Greencore’s Dublin HQ (its 25 staff are moving to a new office at Dublin Airport), and records his weekly video, which is circulated to all staff. That evening he will fly to the UK to visit some part of its operation, returning home on a Thursday evening. He says he usually does some work from home on a Saturday but Sundays are kept free.
The move to Greencore has been financially rewarding for Philips. He earned €1.67 million last year with Greencore, compared to his €250,000 a year salary with DAA. The role also allows him to continue living in Ireland. “I’ve got three kids: one was born in Brazil [when Philips was working for Walmart], one was born in Canada [Galen Weston’s retail empire], one was born in Germany [Walmart again]. We don’t want to go on the road again. So I was really thrilled to get this role. Greencore is an iconic brand and I’m delighted to be here.”
CV
Name: Dalton Philips
Job: chief executive of Greencore
Age: 55
Lives: Co Wicklow
Family: Married to Penny Philips with three children (one of whom has just started working for Ryanair on a graduate programme)
Hobbies: “I’m going to do the Copenhagen marathon in May, which will be my 20th marathon. And then the second thing would be my faith. It’s important to me. I’m a regular churchgoer.”
Something we might expect: He loves food.
Something that might surprise: He has a pilot’s licence.
Leadership style: “I like to be quite operational and close to what’s going on. The people side is really important to me. And I’d be quite consensus-driven, to collectively get to an answer. That’s probably changed as I’ve got older.”
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