Dairy Crest adds voice to concerns over butter price rises
Dairy Crest has become the latest dairy giant to warn over the cost of cream and butter, saying it would come under pressure this year because of price rises.
The Cathedral City cheese and Clover spread maker said cream prices, which determine input costs for its butter business, have risen "substantially" during the first quarter.
Dairy Crest has cut promotional activity on its Country Life butter brand – which has been advertised by ex-Sex Pistols frontman Jonny Rotten in the past – as it looks to offset the effect of the price rises.
The company, which has its innovation centre at Harper Adams University near Newport, said that had led to a fall in the amount of butter it sold. But the move is also "mitigating some of the margin pressure", meaning it has helped ensure the product remains profitable.
Despite this, the firm said trading in the first quarter was in line with expectations and the outlook for the full year remains unchanged.
Combined sales of Dairy Crest's four key brands – Cathedral City, Clover, Frylight and Country Life – are seven per cent ahead of the same period last year.
Cathedral City sales volumes are up 15 per cent.
Chief executive Mark Allen said: "The year has started well and our branded business has delivered good growth in the first quarter.
"Dairy Crest is well positioned for long-term, sustainable profit growth.
"Despite the pressure on butter input costs, the strong performance of our cheese business means that our expectations for the year remain unchanged."
Earlier this month Peter Tuborgh, the chief executive of fellow dairy Arla, which also has an operation in Shropshire, warned that butter prices were set to rise over the remainder of this year, and that that could even lead to shortages of dairy produce on the Christmas dinner table.
The issue is a shortage of milk coming to the market on the back of a number of dairy farmers leaving the industry amid a severe downturn in farm-gate prices.
That is now pushing up prices, but what many farmers now want is a more settled price which avoids further boom-and-bust cycles for the dairy sector.
The NFU called Mr Tuborgh's claim "scaremongering".
