Wiseman wins milk deal with Sainsbury

Robert Wiseman Dairies yesterday unveiled a deal worth £15m to supply Britain's second-biggest supermarket, J Sainsbury, with about 10 per cent of its fresh milk.

The group, which is based in Glasgow, beat off competition from Arla Foods, the Scandinavian maker of Lurpak butter, to win the contract which will see it supply about 50 million litres of milk to Sainsbury's supermarkets in the North of England and the Midlands. Wiseman's shares rose 3 per cent to 122.5p.

Billy Keane, Wiseman's finance director, said: "We see the contract as a building block for the future. As our business moves south, the importance of Sainsbury's as a retailer becomes more and more important."

Analysts estimate that the deal, which follows a three-month trial and starts later this month, will increase Wiseman's sales by 5 per cent. The extra volumes will be met from Wiseman's Droitwich Spa dairy, near Birmingham, which opened last year. The plant, which runs at about half of its 500 million litre capacity, is expected to be profitable this year.The Sainsbury deal comes two months after the group confirmed plans for a £5.6m milk distribution centre near Bristol.

He dismissed recent speculation that the group had restarted merger talks with Express Dairies, its troubled rival. "We're pursuing a strategy of growth that is not dependent on consolidation, although we would not rule it out," Mr Keane said.