Ditching doorstep delivery prompts Arla revival

By staff reporter

- Last updated on GMT

Related tags: Arla, Milk

Arla Foods UK said it had seen a significant improvement during its
second half, helped on by the sale of underperforming doorstep milk
business to rival Dairy Crest.

Trading has been in line with predictions since Arla dumped the Express Dairies business for £33m, the firm said in a pre-full year trading statement.

The announcement suggests Arla has recovered from a difficult first six months, which saw the group drop £0.9m into the red after making a £25m profit during the same period a year earlier.

The loss brought a warning from Arla UK's parent firm, Scandinavia-based Arla Foods, that business must improve.

Express Dairies had been eating into Arla UK's profits and the group said the doorstep delivery share of liquid milk sales had shrunk by 14 per cent since 2000. Cheaper alternatives available at all supermarkets and convenience stores have undermined the sector.

The sale of this business combined with continued branded product growth to give Arla a more positive outlook in the second half.

Butter brand Anchor grew five per cent year-on-year, despite recent attacks on Arla for shipping the product 11,000 miles from New Zealand. Sales of Lurpak butter also grew eight per cent.

In milk, the Cravendale brand recorded 10 per cent sales growth, although progress has slowed since March when supermarkets cut prices on their private label milk. A new marketing campaign for Cravendale will begin this autumn.

Arla' organic milk has been a star performer in the category, growing sales by 25 per cent over the last year, reflecting rapid growth in organic milk sales generally.

The group warned that commodity markets remained weak and that this had resulted in lower milk prices.

Producers lambasted Arla for cutting farmgate milk prices earlier this year, and several producer representatives have warned that constant price cuts on milk will force producers out of the sector.

Related topics: Manufacturers, Arla Foods

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