First Milk to sell its Scottish creameries

First Milk have publically put the For Sale sign up on its two Scottish creameries in Arran and Campbeltown, having unsuccessfully tried for at least three years to sell them under the public radar to numerous potential purchasers.

Whilst Arran and Mull of Kintyre Cheddar are both popular quality branded cheeses the fact is First Milk have battled to make any money from them so commercially they have to be disposed of as the co-op continues to divest itself of loss making enterprises and downsizes.

For the 28 supplying farmers who produce circa 30 million litres of milk each year the news will be a blow but certainly not a complete surprise.  Whilst the farmers will be hoping and praying someone will rescue both creameries they will realise that if no buyers can be found, one or both creamery doors could be closed for good.

Finding buyers looks like a challenge and as one potential punter commented to Ian “I can’t decide whether they are hospital cases or whether there is potential with a gem or a jewel to be had?”  Will the supplying farmers be persuaded it’s financially sound to back some form of management buyout?

Farmers involved certainly need to be asking for clear timescales and a commitment from First Milk as well as what safety net will be available if no buyers can be found within given time frames.  Will First Milk commit to collect and process their milk long term? 

Farmers will realise that if the doors are closed and if no commitment is given it will potentially immediately be followed by closure of their dairy farms unless they do a deal to sell their milk to a mainland processor and abandon the two brands.  The main problem is transporting milk from this area is costly as is the cost of production.

Once First Milk have exited the two creameries they will be left producing bulk unbranded cheddar for Ornua at their Haverfordwest and The Lake District creameries as well as their important partnership with Nestle.  The obvious question is whether there is any reason First Milk need to retain a head office in Glasgow or anywhere else for that matter.  One option must be for First Milk to cut cost and run its various departments from either of the two creameries.

Whilst First Milk’s CEO is based in the Midlands the existing departmental skills base is in Glasgow and will not be easy to relocate or replicate.