Muller & Grahams Dairy Scotland scoop 3 year Lidl deal

Grahams The Family Dairy and Muller will start a 3 year partnership for the supply of liquid milk and butter to Lidl  from June 1st this year.

From June 1st Muller’s total share of Lidl’s business increases by what Ian estimates to be around 70/80 million litres. Meanwhile Grahams retain their sales as Lidl’s main milk and cream supplier in Scotland whilst Trewithen Dairy, Cornwall also retains its current regional contract. 

Ian estimates Lidl’s total milk requirements are around 240 million litres based on 12 RDC outlets averaging 20 million litres each and Muller’s June 1st  share will be around 200million litres or more based on its contract to serve 10 x RDC’s.

The Muller increases come at the expense of Medina who have lost an estimated 40 million litres to  two RDC’s and Arla who lose an estimated 30 million litres to  two RDC’s.  Neither Medina or Arla will be supplying Lidl with any milk from June 1st

The switch in literage is certainly newsworthy, however, as always the real commercials are undisclosed.  Certainly, the innovative 3 year partnership and the offer of fixed price ex-farm gate milk prices from the Muller/Lidl partnership will be of particular interest to Muller farmers and the industry.

Under the deal Muller direct farmers will be able to lock in to a fixed price of 28ppl for a portion of their milk.  The locking in time frame is yet to be confirmed but the expectation is it will be a minimum 1 year and could even be a 3 year hedge deal for farmers, which is a new direction and massive step forward for a major retailer as both Lidl and Muller try to offer farmers real options and solutions to minimise the effects of volatility.  Further details are expected shortly.