Nick Hammond, the freshly anointed CEO of The Spring Sheep Milk Company, has ambitions to quadruple herd numbers to 40,000 in just four years to meet the growing demand for sheep milk. Vincent Heeringa asked what gives him so much confidence in Spring Sheep’s future and just how can Spring Sheep compete with big dairy on the one hand and the feisty plant alternatives on the other?
Vincent: Nick, congratulations on being appointed CEO. Big job ahead! Let’s start with the product. What makes sheep milk different?
Nick: Thanks for inviting me to The Feed, Vincent. Love what you guys are doing. So, yeah, the flavour of sheep milk is absolutely beautiful. I’d describe it being like cow’s milk, but then add a little bit of cream and sugar. It’s a bit sweeter and creamier with a really beautiful mouth feel. It was one of the original things that got us enamored with sheep milk and its potential.
Vincent: Good for a flat white, by the sound of it.
Nick: I have it in my flat white every morning! And the nutritional bit, that’s what really got me excited about sheep milk. A lot of consumers are having digestive issues with cow’s milk but they can tolerate sheep milk. A lot of consumers in Asia really do struggle with digesting cow’s milk. When we first started looking into it we discovered a really interesting opportunity there.
Vincent: What’s the science behind that digestibility?
Nick: We did a full human clinical trial with 30 consumers who had major issues with dairy intolerance. And what we identified was that the fats and proteins in sheep milk are digested differently to cow milk, not just lactose intolerance, which is also very common, but more to do with the unique combination of proteins in sheep milk. And then you add the nutritional aspects. For example, sheep milk’s got a particularly high amount of protein, about 60% more protein than cow milk, and it’s higher in a lot of other vitamins, including iron and calcium. Vitamin A, E and B are all very high in sheet milk. Plus all our sheep are primarily grass fed which adds to the quality of the product.
Vincent: We have a long history with sheep and with milk but not with sheep milk. Seems nuts when the global market is so big. Why is New Zealand so slow to this opportunity?
Nick: The sheep milk industry is a multi-billion-dollar industry globally. And when you look at a lot of the company countries that we’d sort of consider close competitors in dairy, say France, they have two million milking sheep. Spain has three million, Sudan has three and a half million. The reason why New Zealand’s been slow to the party is varied but the primary one is genetics. ‘Normal’ sheep will produce, say 60 or 90 litres of milk in a typical season. But the proper dairy sheep produce around 300 litres.
We’ve developed our own breed called the Zealandia to suit the New Zealand environment, especially outdoor and on pasture. Our highest performing sheep are producing over 600 litres in a single season. So we have good reason to think New Zealand can support a sheep milk industry.
Vincent: So there’s the breeds as a barrier. Another must be the cost of converting the farms?
Nick: In the early years we thought it’d be a massive shift. As it’s turned out it’s not quite as big as we thought. We were using genetic lines from Europe which are almost entirely for indoors. But we found out they performed just as well outdoors. So that’s one big cost removed. Also for dairy farms the residual infrastructure is there. It especially works for smaller dairy farms – 50 to 70 hectares – which are hard to make work economically. The cost is around $200,000 to $300,000 to convert. All you’re really changing out are the bays the sheep walk into and the cupping system.
Vincent: You want to expand from 12,700 sheep now to 40,000 in four years. What region will your growth come from?
Nick: Initially we’ve been focusing on areas within two hours of our spray dryer in Hamilton. So we’re up as far north as Karaka and as far south as Taupo. We’re especially interested in targeting farms that are in sensitive land areas, farms seeking a low environmental impact. And we’re targeting family-owned farms looking for diversification. They’re looking at converting say a third or fourth of their farm over to sheep milking.
And just to be clear, we partner with farmers now. We did the first three farms ourselves as a proof of concept. But now we partner really closely with farmers. We send them the Zealandia sheep, work with them on the conversion and the running of it, and they provide us the milk on contract.
Vincent: To what extent can you claim a lower environmental footprint?
Nick: Nitrogen leaching into waterways is a big issue in New Zealand. We’ve found that sheep have about a 30% to 50% reduction in nitrogen leaching compared to cows. For a start, they’re a much smaller animal so they don’t break up the soil as much. And their droppings are spread much more evenly, so it’s absorbed by their grass.
The other big issue is methane emissions. Methane is naturally produced in ruminants but there’s a few ways it can be reduced. By the way, I think that New Zealand has an opportunity to be the leader in this space across all ruminents. We have some phenomenal scientists and a lot of really interesting things going on.
As for us, we’ve been working a few things. Genetics – some of our sheep produce less methane than others, so we’re trying to figure why that is and maybe if we could elevate those attributes. We’re looking into different feed regimes.
Also, herd sizes. The milking sheep farms are, are typically small, 700 to 800 sheep on sort of 50 to 70 hectares. So that’s a lot smaller than your sort of standard dairy farm, which may be more like 200 hectares
And also looking what our total carbon footprint is. We are beginning some work on that, understanding the carbon cycle and how our systems relates to it. We have to get this right. I don’t think there’s any consumer acceptance of greenwashing in the space. You either need to be really, really good at it or not touch it at all.
Vincent: The idea with regenerative farming is to create a mosaic of land uses. Could sheep milking fit into that?
Nick: Yes, absolutely. We’re seeing a crossover with dairy farms. I think that multiple different operations within the same farm will become commonplace. It’s really worth saying that a global level New Zealand is actually best practice, so it’s a great starting point for this move into regenerative farming – I know it sparks a lot of opinions! I spent quite a bit of time in the United States, looking at their farming models and was a really blown away by how intensive they farm. New Zealand’s already doing what they are just talking about.
Vincent: You’ve had to build an entire industry – from genetics to production to products and markets. Why did you think this was an opportunity worth all that effort?
Nick: We saw a huge opportunity in combining the things New Zealand is a fundamentally good at: animal husbandry, farming sheep and high quality dairy processing – combine that with the challenges of dairy digestibility in countries where they are dramatically increasing their dairy consumption. So those are the sort of two pieces, really. But it’s challenging right, because it did mean that we needed to do everything at the same time: a genetics program, farming systems, validating processing sites, developing products and launching into the market.
Vincent: It sort of reminds me of the electric car market. You know, you need the cars, you need the charging stations, you need the consumer demand and so on. So where did you start?
Nick: We spent the best part of 18 months really focusing on consumer side. Is there a product and market fit here? That’s the hardest thing to get right. I figured that we are genuinely world class at genetics and farming and production systems and so on – but was there a market? So that’s where we put our time and energy first. Now we’re really thinking about how we can ensure that Spring Sheep is going to be here in 20 or 50 years’ time.
Vincent: So let’s talk about your products. If you excuse expression, is there a cash cow?
Nick: Yes, I will excuse it, but only just. The biggest one for us has been young children’s nutrition. So we’ve developed a range of formulas focused on babies and toddlers. I want to say that it’s really important that we support breastfeeding first and we say that very strongly. But formula and toddler milk have been the most important products for us so far. Our toddler drink actually won a global innovation award last year taking out a few of the global giants. So that’s a product that we are really proud of and where the majority of our milk is going into.
Vincent: And that goes primarily to China?
Nick: China’s a huge market for us. But we sell it in New Zealand as well, which is something I’m really passionate about. Our products are made here and should be available here. Malaysia’s going really well. In the early years we focused on Malaysia, Taiwan and Vietnam because we just didn’t have enough milk volume to go to bigger markets. So China’s been quite a recent launch for us. We’ve got an office up there now.
Vincent: Could you see yourself moving down the dairy aisle, you know, starting with milk and ending with cheese and ice cream. Sheep feta is very good!
Nick: Sheep feta is huge. There’s a huge amount of sheep cheese produced globally. But no, our current focus is on nutrition. We view ourselves as an advanced nutrition business that makes its products from beautiful New Zealand sheep milk. We are launching general population ranges and doing homework on a powder range. And we are launching what’s called a Stage Four, which is a children’s milk. And products for seniors, which is another major area of growth along with consumers who struggle with digestibility but still need protein.
Vincent: We should give a shout out to your co-founder Scott Chapman. What’s he up to – is he hanging up his spurs or staying in the business?
Nick: No, he’s still in the business. Scotty and I co-founded the business, which is also half owned by Pamu. Scotty’s an executive director now and he’s just reduced his time and always there for a phone call and a walk around the farm.
Vincent: No doubt we will hear more from Spring Sheep. Good luck with scaling up and the new role.
Nick: Thanks Vincent.
This is an edited version of The Feed’s Long Lunch podcast. Listen to the full version here!