Wiseman continues UK dairy consolidation trend

By staff reporter

- Last updated on GMT

Related tags: Milk

Robert Wiseman's takeover of Definitely Devon's liquid milk
business shows how consolidation on Britain's dairy industry is
continuing amid tension with competition authorities.

Wiseman moved further out of its northern heartland to capture the liquid milk division of Devonshire Dairies in the UK's southwest.

The deal was signed for £800,000 and will add another 20m litres per year to Wiseman's liquid milk output. The group already holds around 22 per cent of Britain's liquid milk market, supplying around 1.3bn litres of milk annually.

Wiseman will get the licence to Devonshire Dairies' Definitely Devon milk brand, at a time when branded dairy sales are showing good growth across the board.

The processor said the deal would also give it much-needed efficiency savings in its operations in the southwest of England. Wiseman plans to expand in the region, and has proposed to build a new dairy facility there.

The takeover of Devonshire is Wiseman's first big deal since it decided to pull out of a move to buy Scottish Milk Dairies, following the launch of an inquiry into the agreement by the UK's Competition Commission.

Jim Begg, Dairy UK's director general, told DairyReporter.com​ many in the industry were astounded by the competition inquiry.

Tension between the dairy industry and Office of Fair Trading has risen in recent months, with several high profile dairy industry officials complaining that OFT interference was threatening to hamper the development of UK dairy and its competitiveness in the world.

"In terms of competition law, we all know the rules but the industry needs to have flexibility to consolidate,"​ said Begg at last week's annual Guild of Agricultural Journalists' meeting.

The industry believes greater consolidation in both processor and producer sectors will be necessary to create an internationally competitive UK dairy sector in the future.

The OFT has said it has a duty to enforce competition law. The body has also been investigating "retail pricing initiatives"​, allegedly intended to pass more money from milk sales down the supply chain. Price-fixing is illegal, despite the difficult position of many milk producers, the OFT warned in a letter to the dairy industry last year.

Ironically, the Milk Development Council said in its supply chain report last autumn that intense competition between the main processors, Arla UK, Dairy Crest and Wiseman, was mainly responsible for cuts to farmgate milk prices from April.

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