Managing Director,
Household
Dairy Crest’s Household business delivers fresh milk and a wide range of other products. We have over 1.3 million doorstep customers, over 20,000 ‘middle ground’ customers ranging from coffee shops to hospitals, and we also supply milk to around 1,000 independent dairymen, most of whom have their own doorstep customers.
The business has an extensive distribution network across England and Wales, with over 3,800 employees and another 1,500 franchised milkmen, 150 depots and 3,500 vehicles. Milk is bottled at dairies located at Aintree in Liverpool, Hanworth in London, and Fenstanton in Cambridgeshire.
Household
Although sales to doorstep customers have fallen over the years as more consumers purchase their milk from the big supermarkets, we are working hard to reverse this trend. We have carried out detailed analysis of our customer base and have found that they value the convenience of having their milk and other essentials delivered, provided we can get the right products and service levels. Customers appreciate the familiar face of their milkman, especially when he delivers against all odds during the sort of snowfalls we saw in February 2009.
Against this background we have invested in our new internet-based, doorstep delivery service, ‘milk&more’, which now has 67,000 registered customers. This will give our doorstep customers a contemporary shopping experience delivered by the traditional milkman. It will allow consumers to order over 100 products through the internet for their next doorstep delivery and will let us compete with convenience stores for top-up purchases. Over the past year we have extended trials of milk&more from 5 depots to 30 depots. We have built a new website, enhancing users’ experience and we have confirmed that we will roll milk&more out nationally to around 120 depots over the summer of 2009. Our trials have shown that milk&more users spend more with us and it also helps with cash collection.
During the year turnover in the Household business rose slightly on the back of higher prices. However the increasingly tough consumer environment and the need to recover higher milk prices at the start of the year adversely affected profits. These factors increased the underlying net annual decline rate to over 10%, although it has since fallen back below this level.
To differentiate our milk we have rebranded it using our Country Life brand and we have also increased the amount of organic milk we sell to doorstep consumers.
Our doorstep delivery service is recognised as being environmentally friendly. We use electrically powered milk floats where possible and over 80% of the milk we supply to our doorstep customers is in returnable glass bottles, which are used nearly 20 times each.
The business has been proactive in controlling its costs. In February 2009 we completed the closure of a bottling dairy in Nottingham and we also shut 15 depots during the year. We continue to work with the suppliers of the products we sell through our business to control costs and to ensure we are able to give our customers the best possible range and value.
Looking forward, falling milk costs will benefit this business and we will continue to drive out other costs to ensure we can offer our consumers the best possible value without compromising service levels. We are excited about this year’s full launch of milk&more.