Unigate PLC

Unigate House
Western Avenue
London W3 0SH
United Kingdom
(01) 992–3400

Public Company
Incorporated: 1959 as Unigate Limited
Employees: 34,922
Sales: £2.2 billion (US$3.98 billion)
Stock Index: London

The evolution of Unigate PLC has certainly been an interesting story. The company, in its various forms, went from selling liquor in the mid-19th century to selling milk and baby food in the early 20th century, and is now a conglomerate that markets goods and services ranging from turkeys to transportation to Mexican food. But through the decades, Unigate has had two constants: growth, and a dairy business that has remained at the core of its operations for more than a century.

The history of Unigate goes back to 1882, when Charles Gates died and left his Guildford, Surrey grocer’s shop to two of his sons, Charles Arthur and Leonard. The Gates’ store primarily sold liquor; it was the local agent for Gilbey’s wines and spirits and also sold beer. The Gates brothers added tea and coffee to their father’s shelves. Then in 1885, according to a story that has become a part of company legend, they were seized by a violent fit of pro-temperance sentiment, vowed never to make money off the liquor trade again, and poured their entire stock of alcoholic beverages into the gutters of High Street, Guildford.

This left them without a source of livelihood, but it occurred to them that the cellars underneath the shop, as well as the yards and stables in back, could be converted into a dairy. They bought a milk separator and started West Surrey Dairy. They purchased milk from local farmers, sold the skim back to them for feeding pigs, and sold the cream to the prosperous citizens of Guildford. In 1888 the company changed its name to West Surrey Central Dairy Company Limited. Three more Gates brothers—Walter, William, and Alfred—and three of their sons joined the family business about this time.

It didn’t take long for the business to become successful enough to justify expansion. West Surrey Central Dairy bought creameries in Somerset, Dorset, and even Ireland. Its brown jugs of cream soon became famous throughout England, although the level of artistry on the label left something to be desired. According to one historian of the British dairy industry, they showed “a cow looking uncomfortably through a somewhat untypical four-barred gate, rather as if its neck had got stuck between the bars.”

West Surrey Central Dairy entered the baby-food business in 1904 when Dr. Killick Millard, medical officer of health for Leicester, asked it to supply powdered milk to help feed children of poor families. Four years later, its “Cow & Gate Pure English Dried Milk” was first marketed on a large scale. The dried milk became widely popular despite the prevailing belief that breast-feeding was essential to a baby’s health. In 1924 the company developed a special export version of its powdered milk, for feeding babies in tropical climates, which became very popular. In fact, an Indian nobleman once placed a rush order for two cases. It turned out, however, that he wanted to feed the milk to his racehorses.

In 1929, the company renamed itself after its popular Cow & Gate product line, becoming Cow & Gate Limited. During the 1930s it worked with scientists to develop specialized formulas to cater to infants with special needs. It came out with Frailac, a milk food for premature infants; Allergiac for babies sensitive to certain constituents of cow’s milk; and a cereal food designed to start babies on mixed feeding at an earlier age.

On the corporate side, the company had gone public in 1918 under the chairmanship of Bramwell Gates, the son of Walter Gates. In the 1920s and 1930s, Cow & Gate expanded by acquiring dairies and creameries. Economic conditions were by no means easy in post-World War I Britain, and many of these acquisitions may have been salvages of struggling businesses. Cow & Gate began by purchasing Wallens Dairy Company of Kilburn in 1924 and added companies in Wales, Yorkshire, Lancashire, Cornwall, Devon, and Somerset over the next 15 years. In 1925 the company decided that its operations were large enough to justify setting up its own transportation subsidiary, and over the next seven decades that part of the company’s operations (now known as the Wincanton Group) would become one of the nation’s largest transport concerns.

Political uncertainty in Europe in the early 1930s convinced the Gates family to seek an overseas source of powdered milk as a way of safeguarding its export business. In 1933 Cow & Gate purchased a controlling interest in General Milk Products of Canada Limited. And indeed, when World War II broke out in 1939, the British government banned all exports of food products, but Cow & Gate was able to keep its overseas markets supplied for the duration through its Canadian facilities.

Bramwell Gates retired in 1958 at the age of 83; he was replaced as chairman by Ernest Taylor. One of Taylor’s first acts in office was to begin negotiating a merger with United Dairies, the nation’s largest producer of dairy products. United was formed in 1917 when Wiltshire United Dairies, Metropolitan and Great Western Dairies, and Dairy Supply Company merged in an attempt to cope with distribution problems caused in the London market by the loss of men, vehicles, and horses to the war effort. In the late 1920s, United Dairies helped pioneer the sale of pasteurized milk in Britain. During the 1930s and into World War II it expanded into Scotland through the acquisition of dairies, and after the war it spread its presence to Wales, Liverpool, Cheshire, Birmingham, and Sherbourne.

The merger between Cow & Gate and United Dairies was consummated in 1959. The new company was reincorporated as Unigate Limited. Integration was not easy, however, and internal politics and rivalry between factions adhering to old-company loyalties continued to plague Unigate for years. In 1963 Unigate acquired Midland Counties Dairies and began buying up small grocery stores and restaurants soon thereafter, but otherwise the company moved slowly in the early 1960s as it tried to digest the merger.

As milk consumption leveled off in the 1960s and began to decline as the decade ended, Unigate responded by increasing its non-dairy businesses and its non-milk product lines. In 1970 it announced plans to expand its retail activities, which included Kibby’s supermarkets, Quids-In clothing shops, Uni-Wash laundrettes, and even some Kentucky Fried Chicken franchises. In 1973 it acquired Scot Bowyers, a meat-processing company. In 1975 it purchased Frigo, an American maker of Italian cheeses, and it acquired another American specialty cheesemaker, Gardenia, in 1978.

Even still, Unigate’s financial performance was sluggish through the early and mid-1970s and it continued to be bothered by political infighting, a sign that the merger was still not fully digested. So when John Clement became chairman in 1977, he immediately set about knocking heads in the name of company unity. Over the next five years, Unigate lost a number of senior executives and Clement, a career dairyman, gained a reputation for autocratic rule. But he also put the company on solid financial footing and accelerated the process of diversifying its business.

One of Clement’s first major acts as chairman was important in this regard. In 1979, Unigate parted with three-quarters of its manufacturing capacity when it sold 16 of its creameries to the Milk Marketing Board for £87 million. The sale lessened its presence in its traditional mainstay, but raised cash for acquisitions and paying off debt. In 1981 Unigate acquired Giltspur, a moving company; Turner’s Turkeys; and Casa Bonita, an American restaurant chain specializing in Mexican food. In 1984 it added another poultry processor, J. P. Wood. In 1985 it acquired Arlington Motor Holdings, followed by Colchester Car Auctions the next year, and added them both to the Wincanton Group. Also in 1986, it added the American restaurant chain Prufrock, which specializes in southern-style food.

In the mid- and late 1980s, however, some of these diversification moves were junked after they proved less than successful. In 1984 Clipper Seafoods, a struggling fish-products business, was sold off. Scot Bowyers was sold to Northern Foods in 1985. And in 1987, Unigate divested several small engineering businesses that had been acquired with Giltspur. To complicate matters further, Unigate also began reinvesting in its milk business in 1987, acquiring the Middlesex dairy H. A. Job for £26 million. As of that year, it was still the United Kingdom’s leading milk supplier, despite relying on milk for less than one-third of its business.

In the final analysis, Unigate is both of the things it has appeared to be in the 1980s—both the largest British dairy company and a dairy company that has drastically cut its reliance on its traditional business. The bottom line is that its financial performance improved dramatically during the decade, even as the milk market showed no sign of improving. Unigate’s pre-tax profits more than doubled between 1981 and 1986, and its debt load steadily declined. It entered the 1990s with a streamlined management structure and in a state of financial health. The unhappy cow with its neck stuck in a gate may belong to the past as a corporate icon, but the legacy of its creators survives.

Principal Subsidiaries

Arlington Motor Holding Plc; Fermanagh Creameries Ltd.; Hassy Ltd.; Wincanton Vehicle Rentals Ltd.; Turners’ Turkeys Ltd.; Unigate (UK) Ltd.; Ashton Foods Ltd.; H. A. Job Ltd.; Panda Van Hire (Exeter) Ltd.; Unigate Poultry Ltd.