cathedral city cheese factory

As Dairy Crest waits for the sale of its liquid milk division to Müller to be cleared by the competition authorities, major dairy players are believed to be gearing up to make a play for its branded business.

French dairy giant Lactalis and Ireland’s Kerry Group are understood to be the frontrunners for acquiring Dairy Crest’s portfolio of cheese, butter and spreads brands, which includes market-leading Cathedral City as well as Clover and Country Life.

Both have strong balance sheets and the necessary financial firepower, and both would have strong strategic rationales. Lactalis has been linked to a move on Dairy Crest in the past and would significantly boost its branded presence in UK dairy by acquiring its branded assets. And the company’s new UK MD, Mark Taylor, knows the business well, having held a number of senior commercial roles at Dairy Crest prior to his move to Lactalis last year.

Kerry, too, would greatly boost its branded footprint in mainstream UK dairy by buying Dairy Crest’s brands; and the new whey venture at Dairy Crest’s Davidstow cheese plant would complement its burgeoning ingredients business.

Market sources believe either company would be a credible bidder for the assets, though one said his money would be on Lactalis being the eventual buyer. “Lactalis are not afraid of paying good money for a business,” he said. “Kerry would be much more conservative.”

There have also been suggestions senior Lactalis executives from the company’s head office have recently visited the UK with a view to assessing potential acquisitions.

It is conceivable Dairy Crest’s branded business could be sold in chunks, but sources believe a single buyer is more likely.

Dairy Crest announced last year it intended to sell its liquid milk business to Müller in an £80m deal. Dairy Crest is currently waiting for the deal to be cleared by competition authorities.

Dairy Crest, Lactalis and Kerry declined to comment.