UK – Nestle has announced plans to reorganise its UK milk supply, processing and packaging operations in an effort to secure its long-term future in the milk business.

The company claims that the proposals are a result of the difficult market conditions in the country bought about by BSE and Foot and Mouth disease.

The company’s Ashbourne factory, which produces canned milk products, is to close following falling demand over recent years. Despite attempts to introduce new product lines the factory is running well below capacity and will close in June 2003.

Nestle states that branded products currently produced at Ashbourne will continue to play an important role in its business. Its Simply Double and Carnation evaporated milk will now be produced by Associated Co-operative Creameries (ACC), while Nestle’s sweetened condensed milk (SCM) is to be produced by Nestle in the Netherlands.

Production of sweetened condensed milk will also stop at the company’s Dalston factory by the end of March 2003. Here, the company is to concentrate on expanding its production of Cappuccino and coffee creamers for the UK and European markets. Two new Cappuccino lines are planned during 2003 at a cost of £2.5 million (€3.9m).

Nestle’s Girvan factory, which currently produces ‘milk crumb’ an ingredient used in the production of chocolate, will close in spring 2003. The company said that demand for ‘milk crumb’ has declined because of developments in chocolate making and because of a decline in exports to Canada.

Dairy farmers will also be affected by the proposals as the company plans to establish a totally outsourced fresh milk supply to its business. Currently, the company sources milk directly from around 460 UK farmers. Nestle will now purchase milk through the First Milk co-operative.

It is estimated that Nestle continues to use the equivalent of 500 million litres of milk in its UK milks, chilled and confectionery businesses. Alastair Sykes, chairman and chief executive of Nestlƒ© UK, said: “The milks business will continue to play an important role in the Nestle UK strategy and we are committed to ensuring the continued production of Nestle branded products in this area. With the recent acquisition of the Ski and Munch Bunch brands Nestle remains a significant player in the UK dairy business.”