The future of Sainsbury’s milk supplier Tomlinsons Dairies is hanging in the balance after the processor notified its farmers it would not be accepting milk supplies.
The Grocer understands the Wrexham-based processor, which supplies own-label milk to Sainsbury’s stores across Wales, called in PwC late last week to discuss options for the business. It told farmers it could no longer accept milk on Saturday.
Neither Sainsbury’s nor Tomlinsons management had returned requests for comment at the time of writing, while PwC declined to comment. However, two Cheshire-based processors, Meadow Foods and County Milk Products, have both confirmed they have given milk produced by Tomlinsons farmers a new home.
A spokesman for Meadow Foods said eight of Tomlinsons’ farms near its factory were now supplying it with milk. Meanwhile, County Milk said the processor was also holding a “counselling session” for Tomlinsons farmers tomorrow “to discuss what options are available to the farmers”.
In total, some 40 farms supply milk to Tomlinsons through its aligned Sainsbury’s supply contract, with a further 30 supplying the processor milk for non-aligned volumes, according to industry sources. Tomlinsons is understood to employ about 190 staff at its Wrexham plant.
Uncertainty over the future of Tomlinsons has escalated during the past fortnight, amid rumours the company was in significant difficulties.
The processor, which secured the Sainsbury’s supply contract in 2016 as part of a diversification of the retailer’s supply base, is also understood to have supplied own-label milk to M&S.
However, increasingly tough market conditions prompted the business to appoint then-PwC partner Stephen Oldfield as an advisor during the summer of 2018.
As first reported by The Grocer last December, Tomlinsons’ directors were understood to have explored a range of options for the business, including a possible sale.
The supplier has failed to shake off concerns over its long-term future ever since.
It reported an 18.3% increase in pre-tax profits to £2.3m for the year to 31 March 2017. Turnover also grew, by 22.7% to £47.1m. But the amount owed to creditors within one year more than doubled to £11.1m. Tomlinsons has subsequently delayed the publication of its 2018 accounts on five separate occasions.
NFU Cymru had “received reports of issues” at the processor, said a spokeswoman, and was “currently seeking urgent clarification and investigating further to understand the problem and the potential impact on our members”.
Local Welsh Assembly member Llyr Gruffydd described uncertainty over Tomlinsons refusal of milk as “worrying news both for the 190-strong workforce and the dozens of farmers across the region who supply the company”.
He added: “Rumours have been flying about since January regarding the company’s future and I have tried to engage with the company since then but not had a response. Workers and farmers need reassurance that their jobs and livelihoods will be safeguarded.”
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