Wiseman awaits

Related tags Wiseman Sainsbury's Milk

The decisions over who will buy the Safeway retail chain and
whether the Arla/Express Dairies merger will proceed could have a
significant impact on Scottish dairy group Robert Wiseman Dairies.

Scottish dairy group Robert Wiseman Dairies is eagerly awaiting the outcome of two decisions by the UK competition authorities, the company has said, as well as the ongoing investigation into its own business practices by the Office of Fair Trading.

Wiseman is one of the leading suppliers of the UK supermarket sector, and as such it is as keen as anyone to see the saga over the takeover of the Safeway supermarket group finally reach a conclusion. Safeway has a lot of stores in Scotland, and a change of owner could have implications - both food and bad - for the company.

The other 'unknown' is the outcome of Arla Foods/Express Dairies merger. The Competition Commission is currently deciding whether to allow the proposed deal amid fears that it will lead to a serious reduction in competition, and as one of Express Dairies' chief rivals, Wiseman will undoubtedly be hoping that at the very least, the regulators impose a number of conditions on the two companies.

It could also be in a position to snap up any dairies which might have to be sold off by Arla and Express in order to win regulatory approval.

But the regulators are also investigating Wiseman, whose business practices in Scotland in particular are once again under the spotlight. An earlier investigation, prompted by allegations of price fixing by Claymore Dairies, Wiseman's main Scottish rival and a subsidiary of Express Dairies, found no evidence of any wrongdoing, but the OFT announced last month that it was to begin a fresh investigation in the light of new evidence.

Whatever the outcome of the various investigations, Wiseman said it was in a good position to continue to build its business throughout the UK. In a trading statement issued in advance of its first half figures, Wiseman said that both volumes and turnover were in line with forecasts, and that there was no reason to believe that full year figures would not be 'satisfactory'.

The £7.2 million expansion of the company's Droitwich Spa facility will be completed next month, increasing the company's capacity there from 350 to 500 million litres per annum, and Wiseman intends to use this additional output to further develop its business in the retail sector - a necessity as the home delivery market continues to dwindle.

This, of course, necessitates continued good relations with the leading supermarket groups - hence the importance of the Safeway outcome - and Wiseman is constantly working with its main customers to find the best deal. The most recent contracts, with Tesco and Sainsbury, started in April, and trading is in line with expectations, as is business with the Somerfield and Iceland/Booker chains.

Like other dairy groups, Wiseman is also at the whim of volatile commodity prices, but its latest trading statement suggested that the situation at present was relatively stable. Bulk cream selling prices remain firm, the company said, and are well ahead of the same period last year, while milk prices are recovering steadily, allowing Wiseman to increase the price it pays to its suppliers - long a bone of contention within the UK industry. A further price increase could be introduced next month, the company added.

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