Blow for Robert Wiseman in shake-up of Tesco milk suppliers

The supermarket giant is rebalancing the share of supply, with Wiseman’s share reducing from 60% to 50% with effect from May 2009. Tesco told Packaging News that Arla would now supply the 10%.

In a trading update, the company said it expected the cut to result in a net reduction of up to 40 million litres supplied to Tesco in the year to 3 April 2010. The reduced volume would impact operating profits by around £2m in the year, it said.

Wiseman estimated that following the loss of own-label volume, its share of Tesco’s total fresh milk in 2009 would be approximately 55%, with the reduction in volume representing less than 2.5% of the company’s overall annual volumes.

The rapid growth in branded product would help to mitigate the reduced allocation of Tesco own label, it added.

Robert Wiseman, chief executive, said: “While we are naturally disappointed with any decision that results in a reduction in the volume of milk supplied to Tesco, even in the short-term, we are confident that with our brands growing strongly we can continue to develop our business with Tesco, and our other customers, in the period ahead.

“We enter the new financial year with well-invested dairies and depots, a sound balance sheet and with good opportunities to maintain our track record of growth.”

The company said its sales volumes and turnover for the year ending 4 April 2009 were in line with forecast.

The company started supplying an additional 172 Co-operative Retail Group stores in south-east England on 1 March.

It will begin to supply to an additional 137 Sainsbury’s Local stores in April 2009.

Wiseman reported that production at its new dairy in Bridgwater was rising steadily and the site was running at close to its anticipated 250 million litres per annum initial capacity.

Plans to increase capacity to 375 million litres were at an advanced stage, it said.

The company’s full-year results will be announced on 17 May.

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