Minsterley deal gives Müller more than Cadbury desserts

Ever since Müller swooped on Robert Wiseman Dairies at the beginning of the year, the UK dairy industry has had a nagging feeling there was more to come.

Despite the German dairy giant’s assertions in January that it was acquiring a “highly complementary” business in Wiseman, the combination of a leading branded yoghurt manufacturer and a liquid milk processor did not quite add up, in many experts’ eyes. Further acquisitions - possibly in the form of some parts of Dairy Crest, a highly popular subject of takeover speculation these days - were needed to make sense of the Müller/Wiseman tie-up, they argued.

A little more than six months later, Müller has struck again, snapping up Greencore’s Minsterley desserts business, which produces Cadbury desserts under licence, for about £4.3m. And although Minsterley is far from the deal to answer all questions about Müller’s strategy, it does raise some interesting possibilities as to the company’s future ambitions in the UK.

That’s not to say that getting hold of the Cadbury business doesn’t hold plenty of attraction in its own right. Acquiring Minsterley means Müller will move from merely selling and marketing Cadbury desserts to actually producing them - a logical move for the company, which will add scale to the Cadbury business and give Müller greater leverage with the retailers, says Hamish Renton, MD of Hamish Renton Associates and a former director at Milk Link and Uniq. “It’s also one less mouth to feed, margin-wise,” he adds.

But at 26 acres, Minsterley is a sizeable plant - too sizeable, perhaps, to justify producing only Cadbury desserts, suspect some industry experts. It has long been an open secret that Müller is looking to expand from its base at Market Drayton and, in April, The Grocer revealed the company was plotting its first move into own-label yoghurts in the UK. With the additional capacity at Minsterley under its belt, a similar expansion into own-label desserts would seem an obvious move.

Müller itself is keeping a tight lid on plans for Minsterley beyond Cadbury, but a spokesman says it sees “strong opportunities” in desserts.

The possibilities at Minsterley do not stop at branded and own-label desserts, though. In fact, some have pointed out that Greencore’s own interest in own-label desserts through its relationship with M&S suggests it would have been unwilling to sell Minsterley to Müller if it thought this would help the Germans build up an own-label desserts presence in its own backyard. So what else could Müller do at Minsterley?

The plant is already set up to handle ice cream and frozen desserts, says Renton, and - as a former liquid milk dairy - could even be used to produce flavoured milk. This could prove an attractive option for Müller, which has a huge flavoured milk business in its German home market but whose foray into UK flavoured milk last year ended unsuccessfully after less than six months.

The flavoured milk Müller tried to sell in the UK was imported from the Continent, but with Wiseman’s milk supply now integrated into the Müller UK family, Müller could use Minsterley to make a concerted push into flavoured milk with British-produced products. “With the issues at Dairy Crest, and Yazoo being imported, there could be a gap in the market for someone to challenge Frijj,” believes Renton.

With his newly enlarged presence in UK dairy, few would count out Theo Müller being that certain someone.