Arla has triumphed over Dairy Crest by winning back the Tesco business it lost to the company almost 18 months ago.
In December 2011, Dairy Crest picked up a new contract to supply 50 million litres of milk to Tesco. The contract was previously served by Arla. However, on Monday, Dairy Crest was informed by Tesco that, in July, it would lose its contract to supply fresh liquid milk to the retailer.
Dairy Crest boss Mark Allen said the “disappointing loss” of the Tesco business underlined the challenges in the liquid milk industry.
“Tesco remains a large and important customer for our key UK brands Cathedral City, Country Life, Clover and Frijj,” Allen said. The loss represented just 3% of Dairy Crest’s total liquid milk volume, he added.
Tesco confirmed that, following a review of its milk processor contracts, Robert Wiseman Dairies and Arla would continue to supply it with milk. It would not identify which company would take over the Dairy Crest volume from July.
However, The Grocer understands that Arla has been awarded the Dairy Crest volume. Arla said it did not discuss relationships with its customers. Wiseman said it did not disclose commercial details.
Although Dairy Crest’s contract equates to a small proportion of Tesco’s total milk supply, it was a symbolic win for the group, giving it a foot in the door with Tesco on fresh liquid milk alongside its two main processing rivals.