The division’s strategy is to focus on brands and this has improved profits over recent years. This year nearly 80% of the sales of the Foods division are branded. To generate more momentum we have further concentrated our marketing expenditure behind our core brands, Cathedral City, Clover, Country Life and St Hubert and spent over 40% more on these brands in the year. As a result, all these brands are in strong share growth and well placed for the future.
Investment in innovation has enabled us to give consumers the choice of buying healthier products without having to compromise on taste or quality. We built upon our previous success with Country Life Lighter and Cathedral City Lighter and have now launched Clover Lighter in the UK and St Hubert Léger in France.
In Foods we will focus on brands and businesses where we can add value and where we own the brands outright. Accordingly, in July 2008 we sold our Stilton and speciality cheese business, based at Hartington, to Long Clawson Dairies Limited. In March 2009 we sold our 49% share of the UK chilled yogurts and desserts joint venture with Yoplait SAS.
Following these sales we have fewer manufacturing sites to invest in. We continue to concentrate on the elimination of waste and inefficiency in order to keep our costs in line with affordability.
UK Spreads
Our UK butters and spreads are manufactured in two factories at Kirkby in Liverpool and Crudgington in Shropshire, and distributed via our national distribution centre in Nuneaton to UK retailers.
The UK market for butter and spreads grew by 12% in the year to March 2009, reaching £1.1 billion. This was primarily as a result of price increases to offset input cost inflation, and volumes were down slightly overall (-0.6%). The largest growth came in the dairy spreads and well-being segments.
The second half of the year was characterised by a significant rise in promotional sales across the market as consumers became increasingly hard-pressed. This has lowered total margins without increasing overall consumption. Dairy Crest recognised the need to provide value to our consumers and accordingly we chose to promote our brands more. This, along with our focus on advertising, contributed to their increased market share and enabled us to far exceed the market growth rate. Together our brands achieved 23% value growth and we were the only major manufacturer in volume growth at +12%. We now enjoy a 20% share of the total butters and spreads market.
All of our dairy spreads brands have performed well in the year, with strong growth on both Clover and Utterly Butterly. Clover, now fully recovered from the previous year’s operational issues, grew by 33% in value and 29% in volume. Utterly Butterly grew by 19% in value and 1% in volume. The launch of Clover Lighter has been a big success, and now accounts for over 15% by value of the brand. In terms of trial and repeat purchase levels it has been the most successful launch in the butters and spreads category in the past five years.
Our butter brand, Country Life, has also continued to grow strongly, out-performing the butter and spreadables segments, with sales up 24% in value and 29% in volume. The brand was relaunched with a very strong television advertising campaign, which emphasised the provenance of Country Life as the only major British butter, featuring ex-Sex Pistol John Lydon as a tongue-in-cheek spokesperson. This, plus a highly effective promotional campaign, and continued strong growth for the lighter variant, has propelled the brand to £60 million at retail value. Within the Dairies division the re-branding of Dairy Crest milk to Country Life is further expanding the brand footprint.
With Clover Lighter, Country Life Spreadable Lighter, Utterly Butterly with Omega 3, and Vitalite we are proud of the choice we offer today’s health-conscious consumer.
St Hubert
St Hubert was acquired in January 2007 from Uniq, and has now become an integral part of the Dairy Crest Group. We manufacture at our Ludres factory in Eastern France, for distribution across France and to Italy. The business continues to strengthen its leading market positions in France and Italy and, despite difficult market conditions, its performance since acquisition has beaten our expectations. The total non-butter French spreads market has remained flat by value at €387 million, with the ‘health’ segment continuing to grow by 2%. Within this market our leading brand, St Hubert Omega 3, has strengthened its market leadership, with value growth of 10% (volume +5%) to achieve an all time high value share of 21% of the French spreads market. Overall St Hubert has held market share.
In a difficult economic context, French consumers have increased their purchases in hard discounters, who now represent almost 15% of retail sales. In September 2008 we successfully entered this channel with the St Hubert brand.
St Hubert’s subsidiary, Vallé Italia, remains the undisputed leader of the Italian spreads market. With renewed media support, Vallé has grown by 8% in value, achieving a market share of 55%.
As in the UK, we are broadening the choice offered to health-conscious consumers. In France, St Hubert Omega 3 introduced a Lighter variant to the range, and in Italy we launched Vallé + Leggera, whose performance is encouraging.
> Cheese