Milk Link has sold its fresh retail milk business to Robert Wiseman Dairies and secured a contract to supply the processor’s new south-west super dairy that is set to open next year.
The dairy co-op will receive £5.5m for Peninsula Milk Processors at Okehampton, Devon, and Newlands Farm near Liskeard, Cornwall, which it bought in 2003.
Combined, the two businesses sell 32m litres of milk, much of it under The Cornish Dairy, The Devon Dairy and Newlands Farm brands.
Wiseman will have the right to use the brands for fresh liquid milk and a spokesman said it planned to exercise that right.
But Milk Link will retain the brand names for other dairy products that it might launch in the future.
It will also be keeping its 8m-litre bulk milk and cream business based at Okehampton.
Will Sanderson, communications manager at Milk Link, said the sale, which is dependent on approval from the Office of Fair Trading, made sense because Milk Link’s strategy was to ensure that it was the number one or two player in any market that it operated in.
“With such small volumes that wasn’t possible in the fresh milk market.”
As part of the deal, Milk Link will continue to supply the two dairies and has also won the right to supply 110m litres of milk a year to Wiseman’s £48m, 200m-litre new dairy at Bridgwater, Somerset.
Mr Sanderson said the business was also guaranteed a 50% share of any milk required if phase two of the plant was implemented, which would increase its capacity to 300m litres.
Barry Nicholls, Milk Link’s chief executive, said:
“It provides another profitable and secure outlet for our members’ high quality, south-west milk and will substantially increase the volumes being processed within our membership heartland.
“The forming of this new strategic relationship with Robert Wiseman complements our already strong working partnerships with others in the industry such as Glanbia and Arla Foods.”
Selling such a large volume of milk to a customer in Milk Link’s milk field would also reduce transport costs, added Mr Sanderson.
“We won’t be trucking so much up to London and the midlands.
“Tom Hind, the NFU’s chief dairy adviser, welcomed the announcement.
“I think it’s really good news for farmers in the south-west.
Securing a deal with an efficient business in their heartland makes sense.
It is essential that the OFT moves quickly without referring this to the Competition Commission.”