Britain’s largest producer of branded and private label dairy products, Muller Milk & Ingredients (MMI) has warned it “cannot rule out” site closures as part of a review into its network of dairies.

The news comes as the latest stage in Muller’s £100 million ‘Project Darwin’ cost-saving programme. The firm has also just agreed on a new logistics partnership with sister company Culina Group.

The business will commence a 45-day consultation process to assess current and future utilisation and capacity requirements at its network of six dairies.

Whilst the outcome will not be determined until this work is completed, a spokesman said: “The company cannot at this stage rule out any necessary action including the closure of a manufacturing site should this be required in order to bring capacity into line with current and future customer requirements.”

Logistics agreement

MMI has also confirmed that it intends to operate in a business partnership with chilled distribution and transport specialist Culina Group to make further savings.

Culina Group will assume day-to-day management control of MMI Distribution from June 1, 2019.

All 2,500 employees working in this area will remain part of Muller UK & Ireland LLP and will see no change to their terms and conditions of employment.

MMI Distribution will assume control from the point that vehicles have been loaded for delivery at MMI’s network of six dairies to the point that products are successfully delivered directly to customers or to a depot.

Tanker operations bringing milk from farms to MMI’s dairies will continue to be managed by MMI, as before.

Patrick Muller, chief executive officer of Müller Milk & Ingredients said: “Project Darwin is making excellent progress with the whole workforce fully engaged in securing a vibrant, progressive future for our fresh milk business and very positive collaboration with customers who share our desire to reinvigorate this important sector.

It is a matter of considerable regret that we must consult on steps which could result in a restructuring of our dairy network and capacity but we must ensure the sustainability of our business and address potential over-capacity in our network.

“The distribution business partnership with Culina Group, a sister company within Müller Group, will put together the two major chilled logistics networks in the UK, ensuring that we can further build upon our reputation for great customer service at the lowest cost.

“MMI has the best-invested dairy network in our industry, and sector-leading quality and shelf life. We have fully recyclable packaging and innovative initiatives to protect dairy farmers from the worst effects of farm gate milk price volatility. Combining this with Culina’s market-leading distribution capabilities gives us an end to end solution which we believe is unbeatable in our industry.“

Launched in February, Project Darwin is designed to cut costs and improve margins to secure a sustainable future for the business.

The transformation programme includes a comprehensive review of every aspect of MMI’s operations – including logistics, back office and people organisation – to simplify the business, reduce costs and increase customer focus and accountability.