Graham's grabs bigger share of milk market with Claymore buy

By Jane Byrne

- Last updated on GMT

Related tags Milk

Scotland’s leading independent dairy business, Graham’s, has boosted its share of the regions’ milk market by buying out rival Claymore Dairies amid the current highly competitive trading environment for the sector.

Family run Graham’s said the acquisition of the smaller dairy operation, which has good processing and distribution facilities, will increase its capacity and give it additional flexibility.

The takeover of Claymore Dairies, for an undisclosed sum, represents the 25th acquisition by Graham’s over the past 17 and the company added that the acquisition will lift its turnover to around £50m a year.

Graham’s produces own-label organic and conventional milk, butters, creams, as well as ice-cream, and the dairy has supply contracts with all the leading UK retailers. Sainsbury’s remains its largest customer, with Graham’s supplying the chain with all of its own-label organic milk and Scottish cream.

Since entering the organic milk market five years, the organic skimmed, semi-skimmed and whole milk portfolio has grown to be worth more than £4m for the independent dairy business and that segment accounts for 15 per cent of all Graham’s milk sales. It launched the first 1 per cent fat organic milk in the UK earlier this year.

The company stated that there would be no redundancies as a result of the merger with Claymore, with the purchase of the rival company bringing its staff numbers to more than 400.

Ian Larg, managing director of Claymore Dairies, said the merger with Graham’s would “lead to greater security for the dairy, its staff and supplying dairy farmers.”

The Balmakeith based dairy, formerly majority owned by Arla Foods, has been hard hit by sector pressures and was taken over by a management buy-out team earlier this year with the subsequent loss of 65 jobs. Last month saw it cut prices paid to its farmers.

Meanwhile, last week, Scotland's largest fresh milk producer, Robert Wiseman Dairies, warned profits could suffer over the next 18 months, citing intense competition and higher fuel and packaging costs.

Fuel costs had risen 16 per cent in the first half compared with the same period the previous year and plastic costs were up 24 per cent, although this was partly offset by higher bulk cream prices.

A spokesman for Wiseman told our sister site that while milk sales had grown 8.5 per cent in the 23 weeks to September 11 and the company was confident volumes for the year to April 2011 would be in line with expectations, profits would be squeezed.

“As a result of recent intense competitive pressures across all sectors of the market, operating profits will be impacted by around £7m in the second half of the year to April 2, 2011 and, assuming no improvement in margins or volume gains, by approximately £16m in the year to March 31, 2012.”

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