Wiseman ups prices to lift dairy profits

By staff reporter

- Last updated on GMT

Related tags: Dairy industry, Milk, Tesco, Convenience store, Robert wiseman

An increase in selling prices helped dairy processor Robert Wiseman
to begin clawing back lost profits, as the group looks to continue
the momentum with more new products and facilities.

Wiseman increased pre-tax profits by six per cent to £26.7m for the full year ended 1 April. The rise marks a slight recovery after Wiseman's earnings fell from £29m to £24.7m in 2004.

Pressure from soaring input costs and retailer pricing has intensified on Britain's dairy industry over the last year.

Wiseman, one of the top three dairy processors, raised selling prices at the start of this year to offset the margin squeeze. Sales for the 2005 full year rose 16 per cent to £568m.

The group said this week that cost rises for energy and plastic packaging had largely stabilised, but remained precarious due continuing high prices for oil.

It also attempted to fend off criticism from milk producers over low farmgate prices.

Producers in Wales said recently the current average price of 18p per litre was unsustainable.

Wiseman, which said lower bulk cream sales forced it to cut down its 0.5p per litre premium paid to producers in March, re-iterated that it paid as-good-a price as competition would allow. It added it was committed to the National Farmers' Union's vision for the dairy industry report, released last year.

The group has actually processed 25 per cent more milk in the last year, after new contracts with Sainsbury's and Tesco more than offset those lost with Morrison's and Asda. It will also begin supplying milk to 500 One Stop convenience stores this June.

The extra business should provide more stability to Wiseman and its milk suppliers, although the firm said it would continue to tackle the pressure on both processors and producers alike through greater commitment to innovation.

The group is set to launch an extended shelf-life milk brand called Puriti this summer, following the success of a private label version developed for Tesco.

It will also spend £2m to advertise its "The One" milk brand and has recently launched a Disney branded milk aimed at children.

Distribution and production should, meanwhile, be improved by Wiseman's plan to build a new, state-of-the-art dairy in Somerset.

The moves show how Britain's dairy processors are trying to address a general trend towards branded and added value dairy products across the European Union, spurred on by price cuts for commodities in the bloc's Common Agricultural Policy reform.

A recent report from Britain's Milk Development Council and Department for Environment, Food and Rural Affairs, warned the UK dairy sector was still facing an innovation deficit.

Related topics: Manufacturers, Pricing Pressures

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