Dairy Crest has bought specialist milk business Proper Welsh Milk out of administration, saving 40 jobs.
The business and assets were acquired from the firm’s administrator BDO for £325,000.
Proper Welsh Milk was founded in 2011 and invested over £1M in a new dairy on the site of the former Whitland Creamery on the borders of Carmarthenshire and Pembrokeshire.
Since then the company has been hit by cash flow problems and went into administration on March 1 2013.
It employs around 40 people and packs local milk for Tesco, Marks & Spencer and a number of other customers.
On January 14 the firm launched its product ‘100% Proper Welsh Milk’ into Tesco stores across north Wales.
‘Consumers want Welsh milk’
Speaking at the time of the launch, director of the producer group supplying Proper Welsh Dai Miles said: “We all know that consumers want Welsh Milk. However, for years that’s meant buying pints that have done an extra 200-plus miles just because someone has closed the local dairy, and moved it to central England.
“We think this is what consumers would consider ‘local milk’ and we’ve been working hard to set up a business that can deliver great-tasting, fresher milk that simply hasn’t taken the West Midlands route to our local stores.”
In a statement issued to FoodManufacture.co.uk, Dairy Crest said it was committed to supporting dairy farming in Wales and was one of the country’s biggest milk buyers. However, until now all of its Welsh milk has been packed in England.
Dairy Crest chief executive
Commenting on the acquisition, Dairy Crest chief executive, Mark Allen, said: “We are delighted to be the new owners of this business, which we believe has a bright future. Our priority is to maintain supply to customers and use this modern dairy in a strong milk field to help us to develop new products, such as vitamin-enriched milk. We welcome the employees of Proper Welsh Milk to Dairy Crest and look forward to working with them.”
BDO’s joint administrator Simon Girling added: “We are pleased that this important facility in the local community has been preserved, and can now enter a new era with confidence, with the support of an industry major.”
Dairy Crest recently stabilised its business with the renewal of its liquid milk contract with Sainsbury in a 210Ml deal that runs out in 2017.
City analyst Panmure Gordon said the deal had removed a key risk to the firm’s plan to return the dairies business to an acceptable level of profitability. Dairy Crest was now on target to reach its dairies division target of 3% operating profit margin, it added.
Other City analysts welcomed the news as the deal removed an immediate challenge for the firm’s supermarket milk business.