Dairy Crest said yesterday that is was near to completing a project to make two crucial ingredients found in baby formula that it seeks to sell into the £7bn Chinese market.
The Cathedral cheese-maker struck a deal with New Zealand dairy giant Fonterra last year to sell whey – the key ingredient in baby formula and a by-product of cheese making – to fast growing markets, including China.
It also formed a joint venture with Fayrefield Foods to make galacto-oligosaccharide (GOS), an ingredient that occurs in breast milk and helps to protect babies from bacteria.
In a trading update for the first quarter, Dairy Crest said these £65m projects at its Davidstow creamery is nearing completion and that it is on track to start selling both products to Chinese shoppers this year.
Shore Capital analyst Clive Black said the company could receive takeover approaches from “a multitude of financial and trade buyers across the world” hoping to capitalise on the growing baby formula market.
The company, which is in the process of selling its milk business to Müller UK & Ireland, said sales for the three month to 30 June were in line with the same quarter last year after strong performance across its Cathedral City and Frylight brands was offset by declining sales at its Countrylife butter and Clover spreads business.
The sale of Dairy Crest’s milk business was referred by the Competition and Markets Authority for a phase two investigation in June over fears that it could reduce competition in the market. The company said it expects an update in August.