Going sour: Dairy Crest profits suffer

Fewer people getting milk delivered and cut-price competition from supermarkets is forcing Dairy Crest Group to consider restructuring its dairies subsidiary.

Chief executive Mark Allen said he was looking at options to restore the milk delivery business to “a satisfactory level of profitability” but those close to the company played down talk of a sale. Allen warned profits in the diaries business, which merged with rival Unigate in 2000, remain under pressure despite efficiency savings. But the internet delivery business, Milk & More, is increasing sales.

The milk delivery arm employs 4,000 to supply supermarkets, homes, businesses and other organisations such as hospitals.

Dairy Crest’s foods business, which is behind brands such as Cathedral City cheese and Clover spread, is performing strongly and will compensate for weakness in dairies. Allen said.

He admitted that sales of some food brands have fallen as the economy continues to suffer but the group has managed to push up prices.

While the group wants to keep milk delivery as part of a “broadly based” portfolio, it may sell off its French spreads business.