Shake-up pending in the dairy industry
By FWi staff
THE dairy industry is expected to see a radical consolidation and rationalisation of its operations in the near future, according to a report in the Financial Times today.
The shake-up is being driven by over-capacity within the industry – estimated to be as high as 25%. But a key factor is the supermarkets which are paring down their suppliers.
Tesco has reduced its suppliers from eight to five, while Sainsbury now has only four. Asda is down to two. Somerfield has eight but does not intend to keep that number.
This has already thrown up winners in the shape of Robert Wiseman Diaries, Express Dairies and MD Foods.
Among the losers are Avonmore Waterford and Dairy Crest.
The Financial Times says rationalisation has not taken place so far because “likely sellers have not been able to agree terms with potential buyers”.
But the newspaper adds that the supermarkets action in pruning their suppliers could provide the impetus.
- Financial Times 17/11/98 page 28