Muller Milk Tanker

The dairy giant reported an operating loss of £132.9m last year 

Müller Milk & Ingredients boss Patrick Müller has pledged to return the processor to profitability after confirming it has finally completed the integration of Dairy Crest’s liquid milk division.

Following an investment of £650m in the business, the dairy giant now had a “platform for the future” and planned to ramp up innovation and seek out new strategic partnerships with retailers, Müller said. The company also boasted “highly efficient” factories that optimised energy, water and wastage as well as a comprehensive logistics network, he added.

“This is an organisation which is essentially just three years old,” Müller told The Grocer. “We’re the new kid on the block, and a new kid in a pretty much tired and financially unsustainable industry. Our focus now is to commercialise this new platform to be a trusted and stable strategic partner for our customers and UK-based farmers.”

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Parent company Müller UK & Ireland cited the costs of integrating the Dairy Crest business as a major contributor to a slump into the red last month, as it reported a £132.9m operating loss for the year to 31 December 2017, despite a 6% surge in sales to £2.1bn.

Those losses were “not sustainable”, added Müller, who pledged to “change and stabilise” what had become a volume-driven sector and take MMI to “the next step” of development. Müller was now “ready to realise our vision to be Britain’s dairy leader”, he said. “If you deliver great service and add value and innovation, it will be a virtuous circle.”

Strategic partnerships

MMI sealed a long-term strategic partnership with Lidl in March. This was the model the company would increasingly follow in the future, Müller added.

“It makes sense. We deliver both branded and own-label products every day to these customers and often manage their farm pools.”

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The business also aimed to be “much more agile” in terms of NPD and trialling new products, including new packaging innovations. Plus, it would be more flexible over some manufacturing costs to make it easier to bring new products to market as it now had the capacity and equipment to manufacture added value products on much smaller runs.

“We can do a lot of product testing through [doorstep delivery service] Milk & More, which acts as almost an innovation incubator for the brand,” he added.

“And with Brexit looming, we will offer certainty. Our customers know that our UK manufacturing footprint gives continuity and security of supply with products which are sourced from British farms, and manufactured here in Britain.”

It comes as MMI also announced the appointment of Brian Watson as its new chief finance officer. Watson joined from Berkshire Hathaway-owned company Marmon, and replaces Douglas Laing, who has moved to spirits company William Grant.