Dairy Crest consolidates
in recent years, a move which is already beginning to pay
dividends.
Dairy Crest, the British dairy products group, has sold its fresh juice business as part of its ongoing programme of refocusing on strong branded products.
The juice unit, which makes mainly from-concentrate drinks for retailers' own labels, has been bought by Princes, the diversified UK group best known for its canned food. The price paid was £11 million (€15.7m).
Dairy Crest reported in March that the chilled juice business had suffered from an increase in juice concentrate prices during the previous year, and although it has subsequently begun to improve profitability, trading in this sector remained highly competitive.
Furthermore, the own label business does not sit well with Dairy Crest's increasingly brand-orientated business, but is a good fit with Princes, which already has an own label juice business as well as a strong branded drinks arm which includes Princes, Virgin, Jucee, Cape, Twist'n'Squeeze and Ocean Spray squash.
The company said that the transaction would result in an exceptional non-cash loss of £3 million. Princes, meanwhile, should see its total turnover rise to around £700 million with the acquisition, of which some £300 million is expected to come from the drink arm.
Dairy Crest now operates in six business areas: spreads, cheese, liquid products, fresh dairy products (through the Yoplait Dairy Crest joint venture), household and ingredients.
The company's portfolio of brands includes the Cathedral City, Davidstow and Wexford cheese brands, Clover, the brand leader in the dairy spreads segment, as well as Utterly Butterly, St Ivel Gold, Vitalite, Carapelli, Argento and Willow, and Frijj the brand leader in the fresh flavoured milk drinks market.
The shift towards a strong branded focus - of which the sale of the juice business is part - appears to be paying off for Dairy Crest, which said that trading in the first six months of the year was in line with expectations.
In the dairy spreads segment, the company has been boosted by its acquisition of the St Ivel business from Uniq last year. The two leading brands, Clover and Utterly Butterly, increased the company's market share and achieved combined volume growth of well over 10 per cent, while the St Ivel Gold brand is in the process of being relaunched with a new advert on UK television from October.
The Cathedral City, Frijj and Yoplait brands also performed strongly with double-digit volume growth and increased market share, Dairy Crest said in a brief statement.
The second half also looks likely to see a marked improvement in the commodity cheese market, with mature cheddar prices expected to strengthen with a resulting improvement in margins.
