Sales of a highly successful premium milk brand have been damaged by the multiples& ' price spat in milk.
The UK's biggest dairy processor claims that the price war that was kicked off by Asda in March has undermined sales growth of Cravendale milk.
Arla Foods UK is "reviewing its options" for the brand following own label price cuts in March across the major retailers.
It has also warned that new market-related raw milk pricing arrangements would be in place for the majority of the second half.
The price of four pints of own label milk was on average slashed by 16p, two pints by 11p, and one pint by 1p. Arla said that increases in sales of Cravendale milks in the first part of the year had not been sustained in the eight weeks since the first cut by Asda on March 9.
The processor said in its first-half trading statement: "The effect of the price reduction is a widening in the price differential between premium, branded and own label milk.
"In light of the pricing environment, we are reviewing options to restore Cravendale's growth."
At the time of going to press Tesco.com was charging 44p/litre for own label whole milk and 63p/litre for two litres of Cravendale.
At Sainsburystoyou.com, the price was 44p/litre for own label whole milk and 62p/litre for Cravendale.
Arla also claimed that its overall milk volumes had been affected by a restructuring and store disposals by two retailers, resulting in lower milk requirements from them.
These factors in combination "are expected to have an impact on second-half profitability by approximately £5m", said Arla's statement.
Its interim results for the six months to April 1 are due to be announced on May 25
Greg Meenehan
Reporter
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