The Kiwis don't like him much, but closer to home Mark Allen is something of a dairy hero. Michael Barker reports

Dairy Crest has rarely been far from the headlines in the past year. From spooking the City in November with a profit warning to pulling off the advertising coup of the year by recruiting Sex Pistol Johnny Rotten to promote its butter and alienating an entire Pacific nation in the process Britain's biggest dairy company has had an eventful time of late.

Dairy Crest chief executive Mark Allen is taking it all in his stride, however. And no wonder. Since he took the helm nearly three years ago, the company's key brands have enjoyed spectacular value growth, Cathedral City sales rising 80%, Frijj's 49%, Country Life's 42%, Clover's 20% and St Hubert Oméga 3's in France 50%. The company's fundamentals are looking pretty good at the moment, too: turnover for the year to 31 March was up 5% to £1.65bn.

And encouragingly, a debt reduction strategy seems to have restored some of the analyst confidence lost in November when Dairy Crest's share price fell to £1.68, just over half its current level and only a third of what it was last September.

Allen insists that although analysts panicked, no-one was unduly worried at Dairy Crest's Claygate HQ. "We felt the business was in a better place than maybe the external market understood," he says, blaming the situation on a dip in global commodity prices that was not matched by a similar drop in farmgate milk prices.

The key, he says, was not to "sit and pray" but instead tackle the problem head on with an emphasis on brands, re-examining the company's cost base and improving its cash position. It then reduced the amount of milk processed through ingredients, sold its stake in Yoplait Dairy Crest for £63.5m in March, and streamlined the business by exiting the Stilton market.

The strategy has clearly worked Dairy Crest boasts market-leading products in the cheese, butter & spreads and dairy drinks categories. Another notable success has been Dairy Crest's high-profile Country Life campaign, launched last October. Some considered John Lydon's recruitment a gamble given his colourful past, but, says Allen, they were missing the point. "We picked Lydon because people believe what he says and, secondly, because he is very pro-British and people don't question that," he says.

Allen wasn't surprised the campaign yielded results (sales are up 30% year-on-year). But he was taken aback by the furore that met subsequent ads highlighting the fact that rival brand Anchor was made in New Zealand and not, as many consumers thought, Britain. He argues that Dairy Crest never criticised Anchor's quality, just cited its provenance. But that wasn't enough to stop angry New Zealand officials describing British butter as 'insipid' and challenging Lydon to pay them a visit.

Allen is tightlipped over whether further Lydon ads are in the offing, but he is unrepentant about having flown the flag for British products. "People should be able to choose their products in the knowledge of where they are made. We did research that showed 39% of Anchor consumers did not know where Anchor came from."

For a British company in a dairy market awash with foreign-owned rivals, the strategy has a certain logic to it even if it did ruffle a few feathers up the road at Arla.

But strong marketing is just one part of the equation, says Allen. "Growth has been driven by advertising and innovation," he says. "The businesses that succeed in recession are those that keep innovating, investing in promotions and recognise the times they are in. It may cause a short-term deterioration in profit, but in the medium term it'll be good for the brands."

Dairy Crest has set itself the target of always having 10% of sales generated by products developed in the past three years. This year, that has been reached thanks to launches such as Cathedral City Lighter, which has become a £20m brand in just two years. "We're looking to develop new brands or variants all the time. We have to treat that target of 10% seriously," he says.

Having modern facilities is paramount and Dairy Crest also appears to be keeping pace with its rivals in that department. While Wiseman and Arla have spent £150m between them in the past year upgrading their dairies, Dairy Crest has spent £34m on an upgrade at its Foston milk processing plant and £26m on a fully-automated cheese-packing facility at Nuneaton.

Despite the recession, NPD will continue to be a major focus for Dairy Crest over the next year and that won't be all occupying Allen's time. Last summer, he was named chairman of industry body Dairy UK, a decision that met with outrage from the NFU, which immediately withdrew its representative from the Dairy UK board.

The row has long since died down, but despite his re-election in July, Allen is still mindful to emphasise that farmer interests are important. "There was some debate when I took over, but as I said at the time, judge us on what we've achieved."

And they have already achieved a fair amount making progress with the FSA on the sat fats debate, developing the Milk Roadmap, integrating the Dairy Council into Dairy UK and establishing a working relationship with levy board DairyCo.

It's been a turbulent 12 months both from a Dairy Crest and a Dairy UK point of view but, as Allen stresses, both are now looking leaner, fitter and in good shape for the future.