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Country Life hit hard in Dairy Crest results

Country Life hit hard in Dairy Crest results

Dairy Crest has announced that its spreads business represented a weak spot in its half-year results, dragging down its overall sales.

The firm cited the below-par performance to fewer butter promotions and an increase in the price of cream.

Sales of Country Life block butter fell substantially during the six months to September 30th, with sales of the brand 17 per cent lower than they were during the same period last year.

Utterly Butterly has also suffered , due to an increasing number of retailers cutting back on the space allocated to butters and spreads in store.

Another brand to be negatively impacted by the cutting back of promotions has been the company's Frijj flavoured milk drink, although this is expected to be just a minor setback as the business has increased production of the brand.  

In an interim statement, the company said: “Spreads profits are down in a butters and spreads market that remains difficult.

“Demand has fallen across the category and higher cream prices have adversely impacted costs.”

But the company did state that it expects its performance for the second half of the year to show noticeable improvements due to the commissioning of a new production line.

There has already been signs of encouragement in Dairy Crest's Cathedral City brand, which has seen sales increase by nine per cent, mainly driven by the launch of new products.

But its restructuring plans, which it had initially hoped would save over £20 million, will cause it to take a £6.8 million hit, due to the costs of incurred by the ongoing rationalisation of its butter and spreads business.

Dairy Crest said that it had continued to increase the price that it paid to its milk supplier, which were helped by its ability to negotiate increases in cream prices and pass the extra raw material costs on to customers.

Total sales for the half-year slipped by two per cent from £688.2 million recorded last year to £672.2 million.

 

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