Dairy Crest affected by rising milk costs

Dairy Crest, the milk giant, is raising prices across its product ranges due to the rising cost of animal feed which is driving up the price of raw milk.

The group, which makes Clover spread and Cathedral City cheese, said the price it pays for milk on both liquid and cheese contracts has increased by 35% in the last 5 months.

Chief executive, Mark Allen, said in general people understand our issues and we don’t see any reason why we can’t continue passing on the price increases. There is strong demand for dairy products in China where there has been a lack of milk. Furthermore, Australia, which is a big dairy-producing country, has been affected by drought over the last few years which has had an affect on supply.

Mr Allen added that the bad weather in the UK this summer had not helped the position as grass was under water and not growing.

In spite of the tough market, the group said its expectations for full-year results remained unchanged. Pre-tax profits rose 21% to £37.1 million in the half year to end September. Revenues increased 29% to £761.4 million.

Furthermore, the company is taking advantage of its online delivery service and has brought the milkman into the 21st century. The company is set to expand its ‘milk & more’ internet doorstep delivery service after successful trials in its south-west London, Richmond, Wimbledon, Epsom and Surbiton depots.

The milk & more service offers a range of fruit and vegetables and organic goods, as well as the traditional pint of milk. Dairy Crest may roll it out across the country in 2008.

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