Dairy Crest factory closure to focus on boosting branded line-up

Related tags Dairy crest Milk

Dairy Crest, the UK's biggest dairy company, has announced the
closure of its Yeovil factory - a move which the company claims
will allow it to pursue its ongoing strategy of building the
profile of its branded products, Tom Armitage reports.

The Somerset-based factory currently manufactures a number of products for Yoplait Dairy Crest, the company's joint venture with French group Yoplait, including own label dairy desserts for a number of UK retailers. The closure of the site will allow the company to focus its future activities on the value-added branded product sector - namely its Petit Filous, Frubes and Yop brands, all of which Dairy Crest claims are showing "good growth"​.

The move marks the closure of the only remaining factory dedicated entirely to the production of fresh dairy products, following the disposal of its plant in Enfield, Middlesex, last year, which similarly manufactured a number of Yoplait Dairy Crest branded products, as well as own label yoghurt and soft cheese.

Dairy Crest had recently claimed that intensified competition and challenging market conditions in the desserts, yoghurt and fromage frais sectors have made it increasingly difficult for dairy producers to operate with a satisfactory trade margin, which perhaps explains the group's recent change in strategy.

In fact, its attempt to move away from commoditisation into the more lucrative branded consumer dairy product sector has already proved highly successful, with its Clover, Cathedral City and Frijj products, as well as Yoplait's Petits Filous brand, all appearing as best-sellers in their respective categories.

According to industry analysts Euromonitor International​, Dairy Crest was the UK's second largest manufacturer of branded cheese products in 2003 after market leader Kraft, which each had respective market shares of 5.3 and 6.2 per cent.

The group said that although the factory closure would provide a small benefit to group profitability in the 2005/06 financial year, an estimated exceptional cost of £1.5 million in 2004/5 would be incurred, representing Dairy Crest's share of the closure costs.

Dairy Crest also added that the factory closure would come into effect in June later this year, resulting in the shedding of approximately 260 jobs. Currently the company has over 7,000 employees across 21 sites throughout the UK and Ireland, including Yoplait Dairy Crest.

Meanwhile, another leading British dairy company Robert Wiseman Dairies announced that it is to relocate its distribution activities to another depot in West Lothian, following the closure of its Midlothian distribution facility in two months time.

The closure comes as no particular surprise, as Wiseman's Scottish interests in the liquid milk sector have dwindled since losing its £70 million contract to supply UK multiple retailer Asda with fresh milk in May last year. Its contracts to supply UK multiples Tesco and Sainsbury's, however, have since been expanded, resulting in an increased distribution presence across England.

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