Food mile focus pays off for Dairy Crest
in Britain while lambasting brands shipped in from abroad appear to
have paid off for the firm, in another round of branded sales
rises.
Country Life was the only packet butter brand in the UK showing year-on-year growth in the six months up to 30 September, said its maker, Dairy Crest, in a trading update. The spreadable version has also become Britain's strongest growing butter brand, it said.
The statement came alongside a strong performance for Dairy Crest's Cathedral City cheddar, supporting its decision to move further away from commodity markets.
Country Life's success suggests public backing for Dairy Crest's recent advert campaign, which attacked rival dairy firm Arla Foods UK for shipping Anchor butter 11,000 miles from New Zealand when Country Life was made on the doorstep.
Food miles have received much media attention in Britain recently, fuelling demand for local food. More than half the people asked in a recent ICM Poll said they would prefer to buy locally produced dairy products rather than imported brands, including Anchor.
The survey, commissioned by the Country Land and Business Association, bolstered both dairy processors and farmers as the UK dairy industry looks to develop the sort of high-value brands needed to increase earnings.
Dairy Crest this week took another step down this path by proposing to sell its retailer cheese division to co-operative group First Milk for £61.9m.
"This sale allows Dairy Crest to focus on accelerating the development of Cathedral City and its other cheese brands," said chief executive Drummond Hall, adding that the sale would improve the firm's earnings overall. Group shares soared to record levels after the potential sale was announced.
Dairy Crest has invested heavily in premium cheese this year, launching Cathedral City Mild in May and recently unveiling a new range under the Country Life brand, including cheddar and Stilton.
First half results, the firm said, would be in-line with predictions and the business was on target for a good full year.
It added that the under-pressure dairies division would be helped by the renewal of a milk supply contract with Sainsbury's, the UK's third biggest supermarket. The recent acquisition of Arla Foods' doorstep milk delivery business, Express Dairies, may also aid sales, although competition authorities were still examining the deal this week.
