Dairy Crest loses £60m Tesco contract

Manufacturing News, Source : TheManufacturer.com
Published : 27 Aug 2004 14:24

Milk supplier Dairy Crest said today that it had lost its contract to supply fresh milk to supermarket giant Tesco.

A statement from the one-time farmers’ co-operative said that following a decision to consolidate to two fresh milk suppliers Tesco has informed the group that the company will cease supplying fresh milk to Tesco. This decision will take effect during the first quarter of 2005.

Dairy Crest’s current sales of fresh milk to Tesco are worth approximately £60 million a year. The profit impact of this change has been initially estimated at between £12 million and £15 million on an annualised basis. The company said a range of initiatives will be implemented to mitigate this impact. These would inevitably involve further discussion with customers and suppliers as well as a review of its current cost base.

Dairy Crest said, as a broadly based dairy business, it will retain a significant trading relationship with Tesco with annual sales of other dairy products, including spreads, cheese and dairy desserts, of over £100 million and will work with Tesco to continue to grow this business in the future.

The Group intends to issue a trading update on the first half of the current financial year on the 22 September.

Comments on this story

click here to add a comment