Dairy Crest has earmarked £75m over three years in its latest trading update for spending on new equipment at its liquid milk dairies.
Over the past 18 months Diary Crest has focused capital investment on the cheese business, opening the Nuneaton packing plant to improve the supply chain feeding the Cathedral City brand.
Dairy Crest is now turning its attention to the liquid milk segment of the business. In its trading update for the nine months ending 31 December, the company said £75m has been set aside over three years for the improvements to the efficiency and infrastructure of its liquid milk dairies.
This money comes in addition to normal replacement capital expenditure and will be funded from cash generated by the business.
Dairy Crest external affairs director Arthur Reeves told DairyReporter.com that the investment plan concerns 4 dairies that pack supermarket milk in the UK.
Reeves said this means new kit, including filling and packing equipment, to improve efficiency and widen capabilities.
Extending the capacity of the company to deliver more sustainable packaging is one aspect of this plan but Reeves said the new equipment should also allow Dairy Crest to explore different ways to pack milk.
But the investment plans are not on the scale of the milk processing expansions envisaged at rivals Arla Foods and Robert Wiseman. Reeves said for Dairy Crest the focus is on efficiency as its liquid milk dairies are already well-invested and well-situated.
CEO Mark Allen said in a statement: “The increased investment in our liquid milk dairies will allow us to drive further cost efficiencies, remain competitive and maintain high levels of service to our customers.”
Dairy Crest revealed the investment plans as it published financial results that included profit figures slightly ahead of expectations thanks to a strong performance in the latest quarter.
For the nine months ending 31 December, sales were down one per cent as a result of lower commodity ingredient sales and a reduction in sales to non-major retailers.
But the decision to focus marketing and sales efforts on five key brands (Cathedral City, Country Life, St Hubert Omega 3, Clover, and Frijj) did bear fruit as sales of these brands were up 10 per cent on last year.