Wiseman picks up Co-op supply deal, lifting volumes 7%

Published on Thursday 23 April 2009 21:38

ROBERT Wiseman Dairies has won a major chunk of new business from the Co-operative Group, boosting the Scots firm's annual volumes by about 7 per cent.

Wiseman has picked up the contract to supply the Co-op's stores in the north of England, winning the business from a struggling English firm, in a deal that will add about 116 million litres to the group's annual production.

East Kilbride-based Wiseman already sells the Co-op 142 million litres of milk a year, supplying its stores in Scotland and the South of England, contracts that were also extended yesterday. The new deal is equivalent to about 7 per cent of the group's volume last year of 1.6 billion litres.

Yesterday's contract was won at the expense of Dairy Farmers of Britain (DFB), the Cheshire-based dairy co-operative, which parted company with its chief executive, Andrew Cooksey, this week, following a lengthy restructure that has resulted in some 600 redundancies.

It is thought that DFB, which had been struggling with ageing assets and debt for several years, may have been losing other pieces of business in recent months as the uncertainty causes its customers to look elsewhere.

In a statement yesterday, DFB said it was working with the suppliers chosen by the Co-operative Group "to ensure that the migration of milk supply is managed with customers' and farmers' interests in mind".

Dairy Crest and Yeo Valley picked up smaller parts of new business from the Co-op in the latest tender.

For Wiseman, the contract marks a rebound from its most recent trading update in which the group warned it had lost a chunk of its business with Tesco, after Britain's largest retailer elected to adjust its supply balance. The move resulted in 40 million litres of annual supply being awarded to Wiseman rival Arla, although the Scots company said it was increasing its share of business with Tesco through sales of premium products.

Chief executive Robert Wiseman, whose father founded the company, said he was confident about Wiseman's prospects in the coming year.

"The Co-operative Group has been an important customer for many years, and we are very pleased to extend our relationship by supplying this additional volume," he said.

"We have an efficient and well-invested network of dairies covering the country, a sound balance sheet, and we move into the new financial year with confidence."

Shares in the company rose 4p to close at 333p, valuing Wiseman at about 240 million.