Healthy outlook for Dairy Crest's financial ambitions

By Neil Merrett

- Last updated on GMT

Related tags: Dairy crest, Milk

Higher pricing and an increasing focus on healthier products
continues to ensure that Dairy Crest remains in line to achieve its
full year sales targets, the company announced today.

The UK-based dairy group said that despite the dwindling global milk supply, it had managed to offset the effects of higher commodity prices on its operations for the six-month period ending 30 September. The claims highlight the benefits to dairy processors of expanding their operations into production of higher value good and new markets to offset rising cost pressures. In terms of Dairy Crest's food brands, the company said it enjoyed strong sales growth for cheese through its Catherdral City brand, including a lighter alternative of the product launched in February. Sale of its spreads like Utterly Butterly also posted strong growth on the back of increased marketing and promotional activity. Dairy Crest added that it expected continued growth for the brand following last month's launch of an Omega-3 enriched variation of the product. The healthier focus was spread throughout the segment, with the Country Life brand also expanding to include a lighter variety for weight conscious consumers. However, volumes for the group's clover brand of spreads were negatively impacted in the first fiscal half, after the company was forced to recall the product in May amidst fears of mould contamination. Though sales have been improving over the last six months, increased raw material and restructuring costs had severely restricted advertising expenses for the brand, the company said. Outside of its core UK markets, Dairy Crest's international St Hubert brand also posted strong growth during the period. The division, which it acquired in January, has granted the company a strong foothold in the French dairy market through spreads and yoghurt-based products like Petits Filous, Frubes and YOP. Dairy Crest added that it was also expecting an improved performance from its dairies over the period because of cost cutting measures. The company said it had moved ahead with plans to relocate production from its Totnes plant this month to other sites around the country as part of this focus. The company is also cutting costs through the integration of its express dairies delivery service, which has led to the closure of nine depots that the company deemed to be overlapping. Despite continued profitability during the period,​ there was some difficulties during September with the group alleged to have been one of a number of processors involved in price fixing by the UK's Office of Fair Trading (OFT) ​Major supermarkets and dairy processors allegedly cheated consumers out of £270m (€389m) by colluding to increase prices for dairy products, the OFT claimed last week. In a provisional decision, the competition regulator alleged supermarkets Asda, Morrisons, Safeway, Sainsbury, and Tesco, as well as dairy processors Arla, Dairy Crest, Lactalis McLellan, the Cheese Company and Wiseman, collaborated to fix the retail price of milk, butter and cheese.​ Dairy Crest said that it was reviewing the OFT's findings and would respond accordingly.

Related topics: Manufacturers, Dairy Health Check

Related news

Show more