Germany dairy giant Müller’s UK fresh milk arm is to drastically cut the number of milk and cream SKU’s as part of its Project Darwin cost-cutting drive.
Müller Milk & Ingredients (MMI) said it is likely to pare down the 835 fresh milk and cream SKUs manufactured across its network of six dairies by up to 40% as it aims to save GBP100m (US$130.8m) in two years.
The group said the move will allow it to reduce plastic use by 400 tonnes per annum whilst substantially cutting food waste and distribution costs as it simplifies its range.
It describes the measure as an “innovative lightweighting exercise, made possible by Müller’s investment on in-house milk packaging capabilities”.
Patrick Müller, CEO of Müller Milk & Ingredients, said the company was dealing with “unacceptably high levels of product waste, energy use and complexity throughout our business”.
He added: “We are working closely with our customers who are fully-aligned with the need to simplify and improve environmental and business performance and we are extremely encouraged by the response we’ve had. At a typical dairy, more than 90% of the milk we buy from farms is manufactured into less than 80 different product formats, meeting customer requirements for different milk types, pack sizes and labelling formats.
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“At the same dairy, the remaining 10% of milk would be processed into a further 125 SKU formats, which is staggering. Typically, this milk will be packed into smaller or unusual formats which tend to be far less efficient, not only in terms of manufacturing, but through the whole supply chain.”
Project Darwin was launched in February with a goal of lowering costs and improving margins from Müller’s fresh milk business in the UK and Ireland.
The company said at the time the move would “require tough decisions.”