Inflationary pressures in dairy have pushed down profits at Graham’s The Family Dairy and clotted cream maker Rodda’s, new sets of accounts have shown.
Margins were squeezed at both family-owned businesses in the year ended 31 March 2025, resulting in a £1.9m fall in operating profits at Graham’s to £2.6m and a dip from £1.8m to £806k at Rodda’s.
Graham’s managing director Robert Graham said farmgate milk price increased from 36p per litre in April 2024 to 40p in March 2025, on top of higher prices from ingredient and packaging suppliers and further rises in the national living wage.
“We made the decision not to pass all of these increased costs on to our customers, but instead to absorb what was feasible, with the intention of easing any price increases to the end consumer,” he added. “This is reflected in a decreased net profit whilst remaining a profitable business, and we are already seeing strong targeted growth in the year ahead.”
Rodda’s, which is reliant on Cornish milk sourced from local farms within a 30-mile radius of its creamery, faced significant increases in raw material costs. MD Nicholas Rodda said the business was forced to pass on the costs in the form of higher prices, but there was a time lag in the increase filtering through to the supermarket chillers.
Turnover nudged higher at both companies in the year, rising by £1.8m at Graham’s to £154.9m and by £760k at Rodda’s to £50.6m.
Graham said the Scotland-based business experienced the largest increase in demand for its Jersey and organic milk ranges that it had ever seen.
“We’ve also continued to work hard to satisfy consumer demand for high-protein products, with the launch of our first protein ice cream range and the expansion of our cottage cheese production facility,” he added. “This has helped us to secure new distribution deals in premium stores such as Waitrose, Sainsbury’s and Booths, to name just a few.”
Graham’s, which makes a diverse range of products from ingredients sourced from Scottish farms, continued its capital investment programme in FY25, with £3.2m being reinvested in modernisation, particularly in manufacturing sites in Nairn and Cowdenbeath. This came on top of £5m in capex in 2024 and £8.4m in 2023.
Rodda’s also registered volume growth during FY25, but the company warned of a challenging backdrop in the current financial year.
“FY26 has been a very challenging year for the category,” Rodda said. “Consumers remain under pressure and are increasingly focused on absolute price points, which is clearly influencing purchasing decisions. At the same time, we’ve seen high milk volumes coming off farm at strong milk prices, combined with low returns on excess volume.
“New business wins and innovation – including flavoured NPD at Christmas and growth through discounters – have helped to moderate some of the impact, but not enough to fully offset the wider market pressures.
“Our focus is now firmly on rebalancing the business through the remainder of FY26, while continuing to invest in existing and new projects that will support a stronger, more sustainable position as we move into FY27.”
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