Shore Capital analyst Clive Black said: "Wiseman has a foot in the door to Asda through its supply of Netto, which Asda is in the process of acquiring.
"Additionally, Dairy Crest is proving to be no shrinking violet with a plan to invest £75m to sustain its competitiveness and possibly increase capacity too....it also won business to supply some Cooperative stores from Arla in recent months."
Panmure Gordon analysts Graham Jones and Damian McNeela also predict Asda will review its milk supply arrangements over the next 12–18 months, with Wiseman best-placed to pick up extra volumes. “Given Wiseman’s lower cost structure we would expect it to be able to compete more effectively than Dairy Crest in a tender process."
Heavy discounting on milk 'largely self-funded'?
Meanwhile, Asda’s headline-grabbing discounting on fresh milk (it is selling four pints for £1.25 compared with a previous price of around £1.53) appeared to be "largely self-funded", claimed Black.
But this could change, he said: “We continue to believe that the broad balance between supply and demand means that it [Asda’s recent price cutting] is largely retailer-funded. That said, if retail milk pricing structurally adjusts category margins in store, then we cannot rule out that some pain will be shared through the supply chain.”