First Milk has set its sights on building a premium own label cheese business out of the factories it has bought from Dairy Crest.

First Milk chief exec Peter Humphreys said there were great opportunities to be found in building up retailers' own cheese offers.

"It's a win-win situation: there's more margin for us, while retailers get category development exclusive to them. There are opportunities with each retail customer on a specific range."

The first steps will be to build regional cheese brands, probably Cumbrian and Pembrokeshire because they fit with the Aspatria and Haverfordwest cheese plants acquired from DC.

"We'll build on provenance and a different taste." Ultimately, Humphreys wants to do 'a Davidstow' - a reference to Dairy Crest's prize winning Cornish cheese - by creating added value provenance brands for own label customers including Asda, Morrisons, Tesco and Somerfield.

Growth will be squeezed out of the business by upping throughput at the two plants and making production more efficient. Aspatria and Haverfordwest supply retail customers with 73,000t of cheese a year but only manufacture 50,000t themselves. That will be increased, although First Milk is still contracted to buy 15,000t a year of DC-branded cheese under a 'services agreement'.

The same agreement will see Dairy Crest distribute much of the co-op's cheese.

First Milk will work to keep hold of the contracts inherited from DC, and Humphreys says his first job is to build customers' faith in the new owners.

He also wants to develop a leading dairy ingredients business.

Part of its £62m deal with Dairy Crest included SDI, a £14m a year whey producer at Maelor. "A lot of pre- and probiotic foods have whey in them," Humphreys added.