Managing a milk giant

By Ryan Willoughby

Synlait Milk chief executive John Penno.

Synlait Milk chief executive John Penno is continuing his connection with Massey University through the establishment of a research and development centre at the Manawatū campus. He talks to Ryan Willoughby.

Growing up on a cropping farm in Waimate in South Canterbury, John Penno thought he would spend some time at university before returning to help run the family farm.

Never in his wildest dreams did he think he would one day be a scientist, a manager, or a chief executive of a milk processing company with a market value of $1.4 billion.

Penno is chief executive of Synlait Milk, a dairy processing company that processes around 700 million litres of milk each year and employs more than 600 people in Canterbury, Auckland and Palmerston North. The company has expanded rapidly in recent years and plans to build a $260 million infant formula manufacturing plant in Pokeno, North Waikato. In February, Penno returned to Massey’s Manawatū campus to open Synlait Palmerston North and launch a research and development centre alongside the FoodPILOT plant.

As chief executive of a rapidly expanding company, Penno has had his fair share of challenges and successes, however, before he was leading a company, he was just another young person deciding what to do with his future.

“The plan to run the family farm went out the window pretty early as I learned pretty quickly that our farm really wasn’t that big and dad had it handled by himself, so I got into the job market. It was a little bit of luck really that I ended up as a consulting officer at LIC [a herd improvement and agri-technology cooperative]. I was on the ground meeting farmers and learning the issues, so that time opened my eyes.”

This hands-on experience in the industry quickly turned into a role as a scientist with Dairy NZ.

“It was a really great time for me just coming out of university, working with farmers and trying to find ways of producing more milk for less. We were really working on some pretty interesting stuff like nitrogen fertilisers and increasing the performance of the milk, and I was pretty lucky to work with some really clued-up scientists in farm production research. But, I quickly realised that I couldn’t go any further without getting some study under my belt.”

Standing on the banks of the Manawatū rugby stadium, known locally as the boneyard, Penno remembers talking with the late Massey Professor Colin Holmes, about a PhD that quickly become a reality.

“It was hard work while still working, but it was actually a really great time as there were lots of us doing our PhDs at the time, but I did get to spend a good 18 months at the Manawatū campus. It was great to just build my knowledge and work on the issues from another perspective and soak in the atmosphere there.”

Penno graduated with a PhD from Massey University in 2001, and started his career in the dairy industry.

“By the time I finished my PhD I had pretty much left science behind and started a management role, but that’s not to say I wasn’t using those skills. Engaging your mind on that level and learning to think critically about things has served me well in business. Science is about forming a hypothesis based on the evidence, testing it out, and you learn to be critical of woolly-thinking which often leads to mistakes, which in business is expensive.”

In 2000, Penno took that drive and founded Synlait Milk, with two other Massey alumni, dairy farmers, Ben Dingle and Juliet Maclean. He has been a full-time executive for the Synlait Group since 2002.

“Those first few years for a company, trying to get started and grow, were tough because of the timing. Quite literally when our first container of product was leaving Lyttelton Harbour the global financial crisis was just kicking off. But I think what we learnt in those years has really paid off down the line and made us a lot stronger, and we learnt some lessons we have never forgotten.

“Our ambition now is to diversify alongside a very successful powder business into other categories. A deal with Foodstuffs South Island is just the beginning in our Everyday Dairy category, and our focus is on products for Kiwis as a starter. The partnership with Massey is key to exploring new markets, as we need the technology and innovation to form new products which combine the base health benefits of milk and make it even better.”

However, as the company moves from strength to strength, Penno has indicated he will step down as chief executive some time in 2018, but will stay on with Synlait Milk on the board of directors.

“It’s not very often you get to leave as CEO when your company is in great shape with a great team of people ready to carry it even further. I could never leave it entirely as I’m staying on the board.

“My wife Maury and I are still energetic so we are still far too young to be sitting back and enjoying retirement. To be honest I don’t even think retirement is even an option. We have a few things we want to pursue.”