Dairy Crest wins Morrison's contract

SIR Ken Morrison threw a lifeline to Dairy Crest's supermarket milk division as he handed it the supply contract for half of Morrisons stores' pintas and kicked out arch-rival Robert Wiseman Dairies.

The move was seen as a blow for Wiseman, whose shares crashed 11% - by 30p to 240p - but a great success for Dairy Crest, which gained 18p to 459¼p. Victory was crucial after Dairy Crest's loss of the Tesco and Asda contracts last year.

Arla Foods, the old Express Dairies, will supply the remaining half to Morrisons, the last of the grocery giants to reshuffle its milk suppliers.

Wiseman also lost Asda, which made Arla sole supplier, but won Dairy Crest's Tesco contract and emerges broadly neutral from the recent tendering round despite today's loss. Dairy Crest is down about 15%. Previously, Wiseman and Dairy Crest supplied about a third of Morrisons/Safeway milk and Arla the rest.

Today's contract loss will cost Wiseman about £40m in annual sales while Dairy Crest will pick up about £30m and Arla £10m. Dairy Crest chief executive Drummond Hall said: 'This is very important to us for volume, range and depth of our customer base.'

Hall has been hunting for new milk sales avenues and is close to buying the Midlands Co-operative's dairy business, securing 200m litres annual supply to Co-op, caterers and homes.