Advertising puts the fat in Dairy Crests results
ADVERTISING support for some of its key brands has allowed Dairy Crest to maintain the price of the products despite a sharp fall in the price of milk.
The company has picked up most of the benefits from the 12% drop in milk prices by spending £1 million a month on TV advertising of its main brands.
John Houlistan, chief executive, said the company had increased margins from 5% to 5.8% by selling a higher mix of its more expensive cheeses, and by not passing on all cost savings to supermarkets.
He said: “In our added-value brands, we have been able to hang onto the benefits from lower milk costs, but in the commodity brands, we have had to pass them on.”
Branded produce now represents 40% of group sales but about 75% of profit.
The group reported pre-tax profits of £20.7m for the six months to 30 September, up from £18.7m last time.
- Dairy Crest sets dividend after good first half, FWi Markets, yesterday (10 November, 1998)
- The Times 11/11/98 page 27, page 28 (Tempus)
- The Independent 11/11/98 page 23 (Investment)
- Financial Times 11/11/98 page 23
- The Daily Telegraph 11/11/98 page 37
- The Herald 11/11/98 page 23