Rising milk prices are forcing independents to choose between margins and sales, with many retailers opting to absorb the increases in order to compete with the supermarkets.
Milk processors Dairy Crest, Müller-Wiseman and Arla have all raised their prices by up to 5p per litre in recent weeks in order to protect farmers at source.
South East London retailer Amit Patel, of Belvedere Food and Wines, said: “Escalating milk prices are not helping the sector. We have absorbed Dairy Crest’s price increases, otherwise Tesco will steal our custom.”
Mayur Patel of Saxon Court Stores in Andover, Hampshire, said he was absorbing Müller-Wiseman’s price rise for now. “My margins are rock bottom,” he said. “The problem is the supermarkets aren’t raising their prices, so I can’t. We will have to increase our prices in the next few weeks, though.”
He said he would start buying his milk from Booker as well as directly from Wiseman in order to increase margins.
Dean Holborn, who owns two stores in Redhill, Surrey, has also absorbed Wiseman’s increases for the time being. “It will affect the gross profit margin by about 6-8%. But I might have to pass on the rises to customers over the next couple of months,” he said.
“Customers have to understand it’s got to be sustainable. I asked Wiseman if they could provide pos to explain the situation and highlight our quality British milk. After all, who wants to import milk?”
But Basingstoke Premier retailer Bob Gibson said Booker was holding its prices. “We have been promoting 2ltrs for £2 for some time, which is in line with the likes of Asda,” he added.
Yorkshire Nisa retailer Chris Pollard said sales had suffered after Nisa put up prices 5p per litre in line with Arla’s hike. “Nisa has provided a poster to explain that the extra 5p goes directly to the farmers. It’s only been one week so hopefully sales will pick up again,” he said.