Dairy Crest moves doorstep delivery into 21st century

Dairy Crest will trial a new online ordering system for its doorstep milk delivery business this summer in a bid to “drag it into the 21st century”.

The firm, which has just initiated a costly recall of its Clover spread following concerns about mould, said: “We’re serving 1.6M customers at their doorstep, who are typically affluent, computer literate ABC1s. We’ve got to tap into that opportunity with a broader range of products and a far more sophisticated ordering system than leaving a note with the empties or phoning the depot.”

Dairy Crest, which has been steadily expanded its doorstep milk business in recent years and already sells bread and organic fruit and veg on its milk floats, said further products would be on offer when the new ordering system was trialled this summer.

Separately, it was also planning further moves into the functional foods arena despite the weak performance of its St Ivel Gold omega-3 spread and a “levelling out” in sales of ‘clever milk’ St Ivel Advance, said chief executive Mark Allen.

Lacklustre sales of its omega-3 spread reflected the recent poor performance of the St Ivel Gold brand, rather than a lack of interest in omega-3, he insisted.

He declined to comment on which functional ingredients Dairy Crest planned to use, but stressed that they wouldn’t come with a prohibitive price tag. Sales of cholesterol-lowering spreads with plant sterols had not grown as fast as some people had predicted “largely because they are too expensive”, he added.

While no final decision had been made, Dairy Crest would probably roll out front of pack labelling based on guideline daily amounts in the coming months, he added.

On an operational front, Dairy Crest was half way through implementing a new ERP (enterprise resource planning) system, said finance director Alastair Murray. “We’ve put in the finance bit; we’re half way through the manufacturing bit; and we’re about to start the new sales order processing and credit control part, which should take at least 18 months to complete.” The system was already bringing greater visibility, traceability and operational efficiencies, he claimed.

Carbon dioxide emissions had been cut by 25% in four years, largely through upgrading boilers, said Allen.

However, the cost of HDPE resin (used in plastic bottles) continued to rise, while the price of other raw materials such as rapeseed oil was also going up as more food crops were diverted into biofuel production, he said. “I am concerned about biofuels on many levels, especially on deforestation. We could wake up one morning and find we’ve created more problems than we’ve solved.”

The cost of the Clover recall, which was blamed on “an intermittent fault in the production process” causing the product to develop an unpleasant smell before the end of its shelf-life, would be “largely covered by insurance”, said the company.

Dairy Crest reported a 24% rise in pre-tax profit to £80.5M on sales up 12% to £1.38bn for the year to March 31.