Robert Wiseman Dairies, the UK dairy group, today (11 March) pointed to the strength of its customer base despite seeing Tesco, its largest client, trim its milk supply deal.

Earlier today, Wiseman, which supplies a number of UK retailers, said its share of Tesco's private-label fresh milk range would fall from 60% to 50% from May.

The dairy firm said the fall in volumes would hit operating profits in the year to 3 April 2010 by GBP2m (US$2.8m).

However, Wiseman said a customer roster including some of the country's largest grocers would stand the business in good stead. At the start of the month, Wiseman started supplying a further 172 Co-operative Group outlets and will boost its milk deliveries to Sainsbury's next month.

"While we're disappointed to have lost volumes with Tesco, the new business we have with Sainsbury's and the Co-op helps to mitigate the volume loss," a Wiseman spokesman told just-food.

Wiseman insisted it had seen "rapid growth" in the sale of its branded milk products to Tesco. Sales of brands including Fresh'n'Lo and the One to Tesco had doubled in the last year, the company said.

For its part, Tesco said it wanted to "balance" its supply from Wiseman and diary group Arla Foods.

"We're just balancing out our supply to our two main suppliers Arla and Wiseman," a Tesco spokesman said. "Arla is predominantly an own-label supplier for us, whereas Wiseman supply both own label and is also strong on brands, which have seen sustained growth in the past year."

The Wiseman spokesman insisted the company's relationship with Tesco remains healthy. "We are comfortably the largest supplier of fresh milk to Tesco," he said.

The spokesman also outlined Wiseman's business with Tesco, which has included supplying a value milk brand for the UK's largest retailer. "Tesco asked us to provide a brand and we were very happy to do that. Tesco decided to create an offering for all the different types of customers there are and we had the opportunity to supply Tesco's whole estate with Fresh'n'Lo, which for us has been good news," he said.

The good news for Wiseman continued with its shares continuing to rise in the wake of the company's forecast that annual profits would beat expectations.

Wiseman shares were up 2.2% to 319p at 16:15 GMT this afternoon following the company's declaration that it was "confident" of booking annual profits "ahead of market expectations".

The company said sales and volumes for the year to 4 April were "in line with forecast" and that its margins had improved during the second half of its fiscal year due to falling farm-gate prices.