Andy Boteler from Riverford Organic Farmers explains how his organisation’s business model responded to the challenge of COVID-19.
Devon-based Riverford Organic Farmers saw demand accelerate when the UK entered lockdown on 23 March. “We went from having a really good level of demand to an absolutely exponential increase in a very short time,” says Andy Boteler, Director of Finance for Riverford, an employee-owned provider of organic fruit and vegetable boxes.
To keep operating efficiently, Riverford made two major decisions. First, it closed its shop to new customers and only served existing customers for a two-month period. Second, it simplified its product range to focus on seasonal organic fruit and vegetables, reducing its more bespoke offerings. “With those two actions we were able to satisfy demand,” Boteler explains. “Even then, we still managed to increase our capacity by 40%.”
Riverford’s office-based co-owners moved to largely remote-working practices. The finance team maintained a presence in the office, however, in order to run the payroll. The switch to remote working has gone down well with the 250 office-based staff. As a result, the business is now considering whether it should allow home working as the norm.
“The team’s effectiveness has been really good,” notes Boteler. “People have been working just as hard, if not harder, from home but there are certain jobs that have to be done in the office. We’ve got to work out a way of getting the balance right.” However, the majority of the workforce is not office-based, so specific safety changes needed to be made for the 500 co-owners who work on the company’s three farms or who pack, drive and deliver.
Riverford hopes that customers’ loyalty to veg boxes will continue over what are likely to be difficult months ahead. But it will also work to retain that loyalty. Boteler explains: “We consider ourselves ‘veg nerds’, but we need to offer our customers choice and excitement. That’s the challenge.”
Boteler believes that Riverford’s business is sufficiently resilient to withstand a recession. “We’re not complacent,” he says, “but we don’t see the demand for home-delivered groceries going away any time soon.” Indeed, Riverford is now welcoming new customers again, presenting opportunities to grow its business. It also plans to deliver on its environmental priorities by investing more in green technologies and further reducing its packaging use.
Riverford’s 20-strong finance team continues to focus on weekly cash forecasting and scenario planning. “Cash is key,” says Boteler. “There’s no guarantee that a growing top line generates a growing bottom line. Fresh food retailing is a low-margin business and you can’t assume that because you are getting better sales, you are converting those into cash.
“More importantly, we will have to make significant investment decisions over the coming months to expand our capacity and delivery capabilities, and keep our co-owners safe. We want to be confident that we can make those investments and still have a business to warrant them in six to 12 months’ time.”