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09 May 2004
Sunday Herald
Wiseman remains on growth trail

ROBERT Wiseman Dairies will consolidate its position as one of Scotland’s most successful businesses of the past decade with chairman Alan Wiseman set to deliver another trading spectacular this week.
He will tell investors on Tuesday that new contracts with Tesco and Netto helped to push sales and milk volumes up by more than 20% last year while profits kept pace with an increase from £23.1 million to around the £28.6m mark.

There are also hopes that he could celebrate the group’s 10th anniversary as a public company with a lift in dividend payments from 5.75p to as much as 7p after dishing out £1m of free shares to employees a few weeks ago.

Ahead of the news, Wiseman shares have been trading near all-time peaks at around 267.5p, up from 176p in the past year and more than triple the low point of 80p touched in 2000.

The success seems to justify the group’s decision to invest heavily in modernisation programmes, including its state-of-the-art facility in Droitwich, at a time when rivals were cutting back and is reflected in its current 20% share of the UK’s milk market, up from less than 2% when it floated in 1994.

The group can trace its history back to 1947, when the original Robert Wiseman sold his farm to become the designated milk distributor for the new town of East Kilbride.

The business took off when his sons Alan and Robert took over in the 1970s and decided to launch an attack on the English market after gaining dominance north of the Border.

Despite allegations of predatory tactics made by some of their competitors, directors maintain they have been able to grow fast by maintaining the trust of their suppliers and have continued to pay dairy farmers nearly 21p a litre for their milk when rivals have cut payments to below 20p to reflect falling commodity prices.

But industry experts believe that Wiseman may also have to cut back its prices this summer to protect its margins following changes to the Common Agricultural Policy designed to restrict European milk production. “Wiseman has some degree of protection as it is more efficient than its competitors and has been growing volumes but it makes only 2.3p a litre profit on its sales which leaves very little room for manoeuvre,” said one analyst.

In the face of the current uncertainty over prices, and possible disruption to supplies, Wiseman is continuing to make plans to capture an even larger share of the English market, which now accounts for more than two-thirds of business. It is understood that plans are well advanced to build a new distribution centre in the southeast of England as a springboard for a major thrust on the lucrative London market in direct competition with Dairy Crest and the expanded Arla Foods. The group is also upping its market awareness by sponsorsing the Great Scottish Run, under its Fresh ‘N’ Low brand. The race campaign launched last week.

The group currently has 13 distribution centres that carry milk from its five dairies to customers through its fleet of delivery trucks in their black-and-white cowhide livery.

At this stage, however, there are no plans to build another new dairy and a spokesman maintained that it would be able to handle increased demand from its Droitwich facility. Apart from its chase to win new customers, Wiseman also has high hopes of its new low-fat milk called The One following a successful pilot launch in Scotland and the Granada television area.

“This has won acceptance in a surprisingly short time and has rapidly moved from being a niche product to part of the mainstream milk market,” claimed one insider.

09 May 2004

 



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