The Arla/Express tie up could leave the milk supply at Tesco and Somerfield heavily weighted towards a single company, creating opportunities for Wiseman and Dairy Crest, said one City analyst. "Arla/Express would have 48% of Tesco's business and 65% of Somerfield's. My guess is that both will look at redistributing this more equally."
Unveiling an 11.7% hike in volume and a 37.9% leap in full-year pre-tax profit, Wiseman chairman Alan Wiseman said tackling overcapacity in the liquid milk processing sector the apparent rationale behind the Arla/Express deal was something of a red herring. "The question is, what sort of capacity is there too much of? We actually still need more modern, high quality capacity."
Wiseman has just announced plans to pump £7m into its superdairy at Droitwich to take capacity up to the 500 million litre mark after winning a raft of new business with the multiples.
A new distribution centre in Durham would service stores in the north east more efficiently than trucking milk down from depots at Leeds and Carlisle, he added.
However, the company is also scouting around for distribution sites in Oxford, Swindon or Luton to service the Greater London market.