Dairy Crest said today (19 September) three of its key brands – Country Life, Clover and Frylight – grew volumes and market share in the first half of the UK group’s financial year.
In a trading update for the six months to 30 September, the UK dairy company said that this is an “improvement” on the first quarter when branded volumes were in line with the previous year.
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Dairy Crest revealed its Clover and Country life brands are increasing their market share in the challenging UK spreads category. Frylight is also showing “strong volume growth”.
However, Dairy Crest’s Cathedral City cheese brand is expected to report a “small volume decline” as the company decided to offer fewer discounts than its competitors in order to “maintain the brand’s premium positioning”. The company has instead relaunched the brand with new packaging and invested in marketing. As a result, margins have “improved” and Dairy Crest predicted volumes will “improve” in the second half.
Analysts at Shore Capital said: “Across the Cathedral City range the group completed a new branding and packaging programme, and in conjunction the decision was made to support the brand’s premium status in the category by holding back on promotional activity, resulting in a small volume decline. We see this as a sensible commercial decision against a very tough +14% comparative, a decision supported by an expectation of a materially stronger margin.”
On its ingredients business, Dairy Crest said: “We continue to benefit from production efficiency improvements at our demineralised whey and galacto-oligosaccharide facilities in Davidstow. In partnership with Fonterra, we are developing the customer base for both products.”
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By GlobalDataThe company predicted that first-half profit will be up on last year’s levels. CEO Mark Allen said the company is well-placed to absorb recent milk price increases. “Recently we have seen inflation across all dairy markets. To date, we have announced increases amounting to 12% in the milk price we pay our farmers… As a strong branded and added value business, Dairy Crest is well placed to deal with inflationary pressures. As such our outlook for the full year remains unchanged.”
Dairy Crest is scheduled to publish its full first-half numbers on 10 November.
