Dairy products firm Dairy Crest has posted a 2% increase in revenue in the six months to 30 September, however it saw a mixed performance among its key brands.
The group's Cathedral City cheese brand posted revenue growth of 7% in the period, while its Clover spreads business saw 9% growth. Volume growth at both brands was down 3% and up 8% respectively.
However, the business' Country Life butter brand posted a 4% decline in revenue over the six months (volumes down 16%) and Frylight saw a 22% decline in revenue (volume down 23%).
Raw Material Prices
On the performance of Cathedral City, Dairy Crest noted that revenue gains were lifted by increased raw material costs, adding that while volumes were down in the period, 'volumes are already improving in the second half of 2018/19 as promotional activity picks up and new products are rolled out'.
Elsewhere, Clover benefited from consumers moving away from butters due to increased pricing in the category, an impact that affected Country Life.
Frylight, meanwhile, was affected by the summer heatwave, Dairy Crest said, with consumers frying less often; also, the corresponding half-year period in 2017/18 saw increased promotional activity, hence the poor comparatives.
Brand Performance
"We have delivered a good first half performance driven by our two largest brands, Cathedral City and Clover. Demand for our Functional Ingredients continues to grow," said Mark Allen, Dairy Crest chief executive.
"Innovation continues to shape the business and we have recently launched exciting new products in all of our categories. We understand the importance of staying ahead of the market and ensuring we are meeting consumers' needs. Food provenance, health and wellbeing are core themes which we will continue to focus on."
Dairy Crest is currently in the process of expanding capacity at its Davidstow creamery, from 54,000 tonnes of cheese per annum to 77,000 tonnes, to help bolster the growth of Cathedral City in both the UK and overseas.
"Our investment at Davidstow is progressing as planned," said Allen. "We are pursuing a number of opportunities to take Cathedral City into new international markets as well as deepen its penetration into existing domestic channels, capitalising on its status as one of the UK's top ten brands according to YouGov. We are confident in delivering our expectations for the full year."
The business has also pledged to simplify its IT processes, a process that should be completed by next year, and will lead to annualised cost savings of around £5 million from 2019/20 onwards.
© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.
