UK – UK dairy companies Freshways Dairy, based in Acton, and Medina Dairy, based in Windsor, have confirmed they have agreed to merge to create a viable, long-term, fresh liquid milk business.
Combining the two businesses will create a more robust dairy company with over 1,000 employees and a processing capacity of 500m liters of British Red Tractor farm assured milk.
The new company which will reportedly trade as Medina Freshways Limited will also enjoy a turnover of around £400 million (US$549 million).
A new board and management structure will be put in place to oversee the merger, ongoing operations, and strategic development of the combined business.
During the transition period, Sheazad Hussain (currently chief executive of Medina Dairy) and Bali Nijjar (currently managing director of the Freshways group of companies), are expected to oversee the company’s operations as joint managing directors.
“Throughout our discussions it has become increasingly apparent how complementary both businesses’ capabilities and cultures are,” Nijjar and Hussain said.
“As such, through merging we will be able to harness these synergies to create a leaner, more agile and fit for purpose business.”
The Medina and Freshways merger is happening at a time when UK’s dairy sector is undergoing yet another period of uncertainty.
Apart from the pandemic, UK dairy market has been forced to contend with oversupply, eroding margins of both the processor and farmer, and declining demand from the consumer.
In a recent study, KPMG noted that even the largest and most established players in the market, Müller and Arla, have been impacted by this trend and have seen profit margins plummet in recent times.
The administration of Tomlinsons Dairy way before Covid-19 was declared a pandemic is another proof that UK dairy sector has been in the woods for some time.
Müller, the UK’s largest dairy processor, also recently affirmed that it will be a demand-led business going forward and backed up its claim by closing its Foston dairy in Derbyshire.
“The removal of capacity from the market, either through site closures or the inescapable failure of some businesses, provides an opportunity for the sector to stabilise its supply to match demand and improve margins throughout the supply chain,” KPMG said in a statement.
“This may be particularly important when, in a post-Brexit world and with recently imposed US tariffs on dairy imports, the ability to access new export markets to offload domestic surpluses may become more difficult.”
With the UK dairy industry facing headwinds, the two companies said they believe the merger will establish a sustainable and progressive dairy business with the requisite scale and agility to compete with the companies dominating the dairy sector in the UK.
They further note combining their operations was also in the best interests of their combined staff, customers, and the British dairy farmers that supply them.
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