Crediton Dairy, the Devon-based British dairy processor behind the Arctic Coffee and Pro Mlk brands, reported a decline in annual profit as weaker dairy market conditions and falling cream values affected returns.
The company’s profit fell by £3.4 million, from £10.4 million to £7 million, for the financial year ended January 3. Despite the decline in profitability, turnover increased by £6.3 million to £137.6 million, supported by higher sales volumes and changes in its retail business.
Weaker Dairy Markets Hit Profitability
Crediton Dairy said market conditions became increasingly challenging during the year.
Milk prices remained relatively high for much of the financial period before declining towards the end as market conditions weakened. At the same time, increased milk availability across Europe put pressure on cream prices.
The company said favourable spring weather conditions helped increase milk volumes, resulting in greater availability of raw milk across the European market. However, the increase in supply outpaced demand for cream, reducing returns across the sector.
Despite the market pressure, Crediton maintained an average standard milk price of 43.6 pence per litre during the year.
Turnover Rises Despite Lower Profit
While profitability declined, Crediton Dairy’s turnover increased to £137.6 million.
The company attributed the growth primarily to changes in the composition of its sales to UK retailers, as well as higher volumes of bulk milk and cream.
The results indicate that increased sales volumes were not enough to fully offset the impact of weaker market pricing and pressure on dairy margins.
The company’s net assets also increased by £3.8 million to £58 million in 2025, indicating continued investment in the business despite the challenging market environment.
Growing Demand for Functional Dairy Drinks
Crediton Dairy said demand remains strong for its expanding portfolio of functional and flavoured dairy drinks.
Managing director Tim Smiddy said the company continues to see opportunities in value-added dairy products as consumers increasingly seek products that combine convenience, nutrition and functionality.
The company is positioning itself as an independent British dairy producer with a focus on higher-value dairy products rather than relying solely on traditional commodity dairy markets.
Continued Investment in Processing Capacity
Despite the decline in profit, Crediton continues to invest heavily in its production capabilities.
The company has invested approximately £44.9 million since its management buyout in 2013. Capital expenditure during 2025 reached a further £3.2 million, including projects aimed at expanding processing and filling capacity.
Crediton has committed another £5.4 million to increase its processing capabilities and upgrade facilities at its site.
Additional investment is also planned for 2027 as the company continues to pursue its strategy of operating as an efficient and flexible producer of value-added dairy drinks.
Outlook for Crediton Dairy
Crediton Dairy’s latest results highlight the pressure that changing milk supply and dairy commodity prices can place on processor profitability.
Growing milk availability across Europe has contributed to weaker cream returns, while lower milk prices towards the end of the financial year created additional pressure on margins.
However, Crediton is continuing to focus on higher-value dairy products, particularly functional and flavoured drinks, while expanding its processing capacity.
The company’s continued capital investment suggests that it expects demand for value-added dairy products to provide opportunities for growth despite volatility in the broader dairy market.
