Welsh dairy company Evan Rees (Butter) Ltd is facing “imminent” closure, in the face of soaring commodity prices and “non-existent margins”.
The Swansea-based, family-run business – which supplies butter under the Hollybush and Green Meadow brands into independent retailers, foodservice and to export markets – said a big hike in butter prices, driven by tight supply, had made it “impossible” to continue.
The average price per tonne for standard unsalted butter has risen by 30% since May 2023, hitting £5,080 last month amid concerns over stocks “due to lower than anticipated milk volumes” during the spring flush, according to AHDB.
Prices were even higher on the spot market, said Evan Rees director Daniel Carman, with a one-tonne pallet of butter jumping by more than £1,000 in recent weeks to just under £6,000/tonne.
Evan Rees’s business model sees it buy 25kg bulk blocks of butter from various suppliers before it is sent to a contract packer, which cuts and packages the butter as Green Meadow and Hollybush – which boasts a heritage dating back to the 1960s.
However, the sharp increase in the price of its raw material, on top of “already minuscule margins”, meant the business “can no longer see any light at the end of the tunnel”, Carman added.
Read more: Welsh cheese producer Mona Island Dairy appoints administrators
“The past few years have been pretty painful,” he said, pointing to how Evan Rees had posted a turnover of £3.5m in 2023 “and barely made any profit, which is crazy”.
And inflationary pressures were being felt more keenly in the wholesale and B2B channel in which the business generally operated, he added.
Prices had risen by about double the rate seen in retail over the past 20 years, Carman said. “So, to buy butter at the moment and try and sell it and cover all your costs and even break even just doesn’t work.”
As a result, Evan Rees, which was run as a “very lean” operation by Carman and his sister, could potentially be forced to cease production, he warned.
Until last year, it had been run successfully by the pair since 2012, after taking over from their father, he added. But it was now winding down stocks.
“This is a cashflow issue. We are fortunate we have a strong balance sheet, so there wouldn’t be any liquidators or administrators involved,” Carman said. “We’re debt,-free. But we’re just obviously very mindful of potential trading losses if we continue.”
Carman’s warnings come in the same week fellow Welsh dairy business Mona Island Dairy, based on Anglesey, was placed in administration by its owners after running out of cash. Administrators FRP said they were now “focused on finding a solution for the business and invite any interested parties to come forward”.
News of Evan Rees’ impending closure comes as retail butter prices in the mults have remained largely static.
Assosia data for The Grocer’s Key Value Items tracker (below), shows the average price of an own label salted butter block (250g) is down 9% year on year, despite the big increases in commodity prices in recent months.
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