Müller reveals major export plans as it agrees Yew Tree Dairy deal
Müller UK & Ireland is taking over Yew Tree Dairy, a 120-year-old family business and a rival milk supplier from Lancashire.
The acquisition is the result of a competitive process in which Müller was the ‘clear preference’ for Yew Tree’s management, who had been looking for a buyer, preferably a larger organization, to steer the business forward.
The deal is set to formally complete later this year, subject to approval from the UK’s competition body.
Shrinking margins and falling profits
Yew Tree Dairy was founded in 1904 and is one of the largest family-owned dairy processors in the country, producing a range of fresh milks, creams and milk powders.
The company works with local farmers in and around the North West England and Scotland, making it a direct competitor to Müller.
But Yew Tree Dairy hasn’t been immune to the challenges that rocked the global dairy industry, with high energy prices and commodity price variations putting pressure on growth.
The company’s operating profit more than halved from 2022 to 2023, decreasing from £11.9m to £5.6m according to its latest full accounts, made up to March 31, 2023. The gross profit margin also fell from 7.6% to 2.8% despite a turnover increase of more than a quarter, from £163.7m to £214.5m.
In the strategic report, the directors highlighted that the company was well-placed to meet market challenges and in a strong financial position.
What the deal means for Müller
DairyReporter reached out to Müller to find out more about the deal, but we were told no further comment will be forthcoming until the acquisition is formally approved.
However, Müller’s CEO Rob Hutchison said in a statement that the agreement represents an opportunity to ‘tap into global dairy consumption growth, unlock additional export opportunities and continue to drive supply chain resilience’. Müller’s objective is to become a major producer and exporter of British-made milk powder, the statement added.
In particular, the dairy processor will be able to leverage Yew Tree Dairy’s Skelmersdale spray-dried milk powder site, which it plans to expand in capacity once the deal goes through.
The global milk powder market is valued at around $30bn, but price volatilities and a reduced levels of imports in China have resulted in softer demand recently.
The global milk powder prices increased during the pandemic but decreased sharply once the war in Ukraine broke out in February 2022, with price volatilities continuing through 2023.
Both whole milk powder (WMP) and skim milk powder (SMP) have made gains since March 2024 however, with the average global WMP prices now in line with March 2021 and SMP’s matching pre-pandemic levels. Prices are largely expected to continue to recover this year.
Despite the global price variations, the category offers many commercial opportunities thanks to the wide-ranging usage applications of milk powder, from food and beverages to health and nutrition.
What the leaders said
DairyReporter understands that it will be business as usual at Yew Tree Dairy and Müller during the ongoing approval process, with any concrete strategic plans set to be ironed out after the acquisition is completed.
Yew Tree Dairy director Carl Woodcock said: “We as a family are very proud of the dairy business we have built and are looking forward to seeing the progression and development by Müller of the Skelmersdale operation. The family felt the time was right to explore new opportunities whilst retaining our farming roots.
“We would like to thank all who have been involved in the Yew Tree Dairy business over the years. Our success is in no small part due to our dedicated staff, farmers and customers that have been part of our journey.
“We have known Rob and the team from Müller for many years. After meeting with the Müller family, we feel confident that this is the right decision for the business to be part of a larger organisation for the next phase of growth that will benefit our staff, farmers, and customers in the longer term.
“The key for us was to find a buyer that not only shared our values but had an exciting vision for the future of the great British dairy industry. Following a competitive process, Müller was our clear preference, and we leave our business in really good hands.”
Müller CEO Rob Hutchison added: “This significant investment in the British dairy industry underlines our ambition to grow Müller and build a better future for the sector.
“Yew Tree Dairy has excellent processing capabilities, a talented team with great expertise, and strong relationships with its customers and supplying farms. When combined with our well-invested and resilient network, I am very confident that these two family-owned businesses will complement each other really well.
“Britain is a great place for dairy farming and has an excellent reputation for quality, welfare standards and sustainability. This acquisition will enable us to tap into global dairy consumption growth, unlock additional export opportunities and continue to drive supply chain resilience.”
