Dairy Farmers of Britain could scupper a deal to promote liquid milk in England and Wales.
The co-op has been slow to back a marketing campaign using the milk moustache device, despite the huge success of generic ads north of the border.
A DFB spokesman said the co-op could not commit funds to the campaign this financial year. "Our budget is committed to supporting our own brands," he said.Other milk companies will only invest if the campaign has full industry backing.
Pictures of celebrities such as Nell McAndrew and Andy Murray sporting milk moustaches have been on Scottish billboards for the past four years. Over that time liquid milk sales in Scotland have risen by 4.1%, according to TNS data. In England and Wales, milk sales have fallen by 0.3% in the last 12 months alone.
Robert Wiseman Dairies said the impact of the campaign had exceeded all expectations in Scotland. "The gain has been substantial," said marketing director Sandy Wilkie. "We're using the evidence to try and do something UK-wide."
All the major liquid milk suppliers in England and Wales have agreed to contribute towards a pilot's £1.3m cost, except for DFB. The MDC is also prepared to match fund it.
If it's successful, dairy companies have said they may commit a similar amount each year from 2009 until 2011. A campaign with the impact of the Scottish one could boost milk sales by 300 million litres a year, claim supporters.
It could also open the door to EU promotional support. Current rules allow Brussels to match fund the industry commitment, equating to a potential annual budget of up to £6m.
But applications for the next round of funding must be in this year and must have the backing of all the UK's main liquid milk suppliers - including DFB.
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