Glanbia shareholders have been warned by their new managing director that the group's liquid milk operation in Britain is facing unprecedented competition to supply the big retail multiples.
Speaking at the Glanbia annual general meeting in Kilkenny, the newly-appointed managing director, Mr Ned Sullivan, said that British multiples were consolidating their suppliers - "sometimes down to a single supplier".
"We've won some contracts and we've lost some contracts", he said, referring to the recent loss of a contract to supply Safeway and a contract from Somerfields that Glanbia won.
He told shareholders that the turmoil in many of the world's economies had led to continued low dairy product prices and added "there is no sign of any improvement". Mr Sullivan said that the only way forward was greater innovation, product development, enhanced marketability and a greater responsiveness to shifts in the market.
On the British liquid milk business, Mr Sullivan later told The Irish Times that there was a general recognition in the industry that there was a need to consolidate and rationalise in the face of the margin squeeze from the multiples. He added that Glanbia would be a willing player in any such consolidation and did not exclude merging or swopping Glanbia's British milk assets with those of other producers.
Mr Sullivan and Glanbia chairman, Mr John Duggan, took issue with comments from shareholder Mr John Cashman, one of the most vociferous opponents of the merger between Avonmore and Waterford that created Glanbia. Mr Cashman had asked what measures were being taken to ensure Glanbia's "survival".
Mr Sullivan said: "I don't agree with the sentiments upon which your question is based and I don't think those sentiments reflect the reality. There is no question of survival or saving the company."
Asked about Glanbia's share price - down 60 per cent from its post-merger high - Mr Sullivan told shareholders: "There are a number of factors at play here, food shares are generally out of favour and there has been a move out of second-line stocks to euroland stocks.
"There is also concern in the market about the imbalance between milk product prices and the price of milk, as well as the competitive situation in the UK. There is also a wait and see attitude to see if Glanbia will perform. If we do perform, then the share price should reflect that."
