Struggling Dairy Crest set for shake-up

Fewer people getting milk delivered and cut-price competition from supermarkets are forcing Dairy Crest Group to consider restructuring its dairies subsidiary.

Mark Allen, the chief executive, said he was looking at options to restore the milk delivery business to "a satisfactory level of profitability", but those close to the company played down talk of a sale. Mr Allen warned that profits in the dairies business remain under pressure despite efficiency savings. But the internet delivery business, Milk & More, is increasing sales.

The milk delivery arm employs 4,000 to supply supermarkets, homes, businesses and other organisations such as hospitals.

Dairy Crest's foods business, which is behind brands such as Cathedral City cheese and Clover spread, is performing strongly and will compensate for weakness in dairies, Mr Allen said. He admitted that sales of some food brands have fallen as the economy suffers but the group has managed to push up prices.

While the group wants to keep milk delivery as part of a "broadly based" portfolio, it may sell off its French spreads business.