Advertising puts the fat in Dairy Crests results

11 November 1998

Advertising puts the fat in Dairy Crest’s 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.

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