Cathedral City producer Dairy Crest targets innovation

By Rod Addy

- Last updated on GMT

Dairy Crest sources 500m litres of raw milk from 350 direct supply farmers across the South West
Dairy Crest sources 500m litres of raw milk from 350 direct supply farmers across the South West
Dairy Crest plans a slew of new product development under its Cathedral City and Promovita brands in the run-up to Christmas.

Issuing a trading update for the six months ending 30 September, the company pledged to launch two Cathedral City snack bars flavoured with caramelised onions and sweet chilli in October. The products would aimed at the snacking market.

It would partner with Nickelodeon to relaunch its kids snacking range and roll out a Cathedral City Lactose Free range.

In addition, the company said it would shortly be unveiling a prebiotic dietary fibre-based galacto-oligosaccharides ‘shot’ for consumers, which it would market under its Promovita brand name. The product would be sold as liquid sachets to be taken daily.

The business bought out Promovita, its 50/50 joint venture with dairy sales firm Fayrefield Foods in December 2015 for £6m​, with a view to boosting its activity in prebiotics.

“Dairy Crest’s revenue growth continued to be underpinned by its key brands of Cathedral City, Clover, Frylight and Country Life, who we estimate delivered combined sales growth of 3-4%,​ commented Darren Shirley, consumer equity research analyst at Shore Capital. “We believe Dairy Crest is now well positioned to drive medium to long-term growth across its high quality cheese operations, whilst realising the potential from the investment in Functional Ingredients.”

Promovita ‘shot’

Dairy Crest chief executive Mark Allen said: “Our Cathedral City and Clover brands continue to drive the business forward, supported by an exciting pipeline of new product developments. Innovation is the cornerstone of this business and we’re looking forward to showcasing a number of examples at our Capital Markets event this week. Our Functional Ingredients business is progressing well and we are excited by the potential of the launch of the Promovita GOS ‘shot’.”

Dairy Crest stated that it aimed to deliver 10% of its revenues from products developed within the past three years. In 2017/18, 14% of its revenues had come from recent innovation, it said.

Clover Light with no artificial ingredients launched last month. The reformulation followed the introduction of the original Clover spread with no artificial ingredients in September 2015 and was a further response to consumers wanting more natural, less artificial products.

Cathedral City, Clover

Dairy Crest’s key Cathedral City and Clover brands had performed strongly over the past six months and were expected to deliver volume and revenue growth, across the whole financial year, the company said.

On the flipside, Country Life had been hit by restricted retail promotions, driven by high butter costs. Frylight was expected to show a reduction in volume and revenue for the first half of the year due primarily to the unusually hot weather, which led to lower oil usage. However, trading had improved significantly for the brand in recent weeks and that trend is expected to continue into the second half of 2018.

“Our balance sheet is in good shape and we are moving forward with the first phase of the expansion at Davidstow,”​ Allen concluded. “Our expectations for the full year remain unchanged.”

Dairy Crest sources 500m litres of raw milk from 350 direct supply farmers across the South West.

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