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Muller announces £100m cost and margin improvement programme

The dairy was reviewing ‘every aspect’ of its business to try and tackle the sustainability problem in the liquid milk market


Alex   Black

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Muller announces £100m cost and margin improvement programme #teamdairy

Muller Milk and Ingredients (MMI) has announced a £100m cost and margin improvement programme as it looks to secure ‘a vibrant and sustainable’ future for its business.

 

Project Darwin looked to transform the liquid milk business, named after evolutionary scientist Charles Darwin.

 

It included a ‘comprehensive review’ of every aspect of the business’ operations, logistics, back office and people organisation.

 

Long term

 

Muller said it aimed to be ‘around for a very long time’ and was looking to create a sustainable supply chain to benefit in the short, medium and long term.


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Chief executive Patrick Muller acknowledged the unsustainable supply chain in liquid milk, saying the review was positive news for farmers.

 

“They want us to be a stable partner, we can only be stable if we are profit making.”

 

He added they hoped they would be taking all farmers with them on the ‘journey’ but they were reviewing every aspect of the business.

 

“We are in the business of adding value to milk. Without milk we are out of business.”

 

He added some of their farmer relationships were into the fourth generation and he wanted to give them a ‘long term stable, secure future’.

 

Sustainability

 

He said the whole supply chain had to be sustainable, with farmers, processors and retailers making money.

 

“We are doing our part to be lean, cost conscious and customer focused to make it future proof.”

 

Mr Muller highlighted 96 per cent of British families bought fresh milk, but the market had changed significantly due to global dairy market volatility, a decline in consumption and changes in retail.

 

And he wanted to keep the ‘Great British tradition’ of fresh milk into the future.

Patrick Muller, chief executive of Muller Milk and Ingredients
Patrick Muller, chief executive of Muller Milk and Ingredients

He said the industry was at a tipping point.

 

“It is not sustainable in its current form. Some of the retailers are acknowledging this as well.”

 

He added the future was in long term strategic partnerships benefitting farmers, processors and retailers.

 

The 12-month Project Darwin programme was already underway and covers manufacturing, logistics, products, procurement, people and customer relationships.

 

Adapt

 

In naming the project after Charles Darwin, Mr Muller highlighted his quote: “It is not the strongest of the species that survives, nor the most intelligent; it is the one most adaptable to change.”

 

Mr Muller added: “It is a declining market. That has completely changed the game of the industry. We now have to adapt.”

Muller Milk Group reaction

Muller Milk Group chairman David Herdman said they were looking on it as a positive but his only concern was whether it could take its whole supply base with them.

 

“We have all agreed the liquid milk market is fundamentally broken. If this is something to drive that forward, ultimately it should be positive.

 

“My worry would be that we take all the farmers with us. I have some concerns that might not be the case.”

 

Mr Herdman said he wanted Muller to ensure it did everything it could to take the current supply base with them and it did not involve giving their members' their notice.

 

He added farmers needed Muller to be profitable to make the whole industry sustainable.

 

“If they packed up altogether the whole dairy industry would suffer.”

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