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Dairy Crest Put in the Corner

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British company Dairy Crest is being sold for £80mn to German rival Muller in a deal that will see the yoghurt makers gain the bulk of its production.

Dairy Crest founded in 1981 is a leading dairy products company accounting for 15% of Britain’s milk.

The deal is subject to competition regulations and if passed, is likely to see Muller UK & Ireland group take over 70 depots where the production of Dairy Crest’s fresh liquid milk, powdered milk, flavoured milk, potted cream, and bulk butters takes place.

Owner Unternehmensgruppe Theo Muller said bringing Muller Wiseman Dairies together with Dairy Crest operations at Severnside, Hanworth, Chadwell Heath and Foston will “benefit customers, consumers and employees of both businesses whilst offering supplying farmers greater opportunity and security.”

There are approximately 14,000 dairy farmers producing around 3.3 million litres of milk a day to falling milk prices. If the market doesn’t get stronger, further effective industry production will become unsustainable.

Dairy Crest produces 1.3 billion litres of milk a year, but recently, profits at the UK’s largest dairy food company plummeted 95% to just £900,000 in the six months up to September. Dairy Crest will close its Hanworth glass bottling dairy in West London and its cream potting facility in Somerset.They will retain ownership of their previously closed depots in Totnes and Fenstanton, as they venture into the baby foods sector through their infant formula range.

They will also concentrate more on their more profitable brands like their cheese range ‘Cathedral City’, and spreads ‘Utterly Butterly’ and ‘Clover’. But will sadly no longer own flavored milk brand Frijj.

Sellers Dairy Crest claim the deal will improve the efficiency of dairy production in the UK, chief executive Mark Allen said it was in the best interests to “create a more sustainable UK dairy sector by delivering economies of scale and cost efficiencies that will underpin investment in the industry.” The two companies will be part of a supply agreement where Muller, who bought Robert Wiseman in 2012 to become Muller Wiseman Dairies, will sell butter to Dairy Crest for five years, and in return, Dairy Crest will provide provisional services to Muller. Ronald Kers, chief executive of Muller UK & Ireland, said: “we are concerned the dynamics of the UK fresh milk market are unsustainable for daily processors in the mid to long term and this acquisition will allow us to reduce our costs, increase our efficiencies and invest in the future.”

Published on Friday 07 November by Editorial Assistant

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