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What price milk?

Asda has permanently lowered its price for four pints of milk from £1.53 to £1.25. Tesco says it will respond. Robert Wiseman Dairies, which supplies almost a third of the UK's fresh milk has had to issue a profits warning.

This year its profits will be cut from £43m to £36m. Next year from £44m to less than £20m. A third of its revenues come from convenience stores and two thirds from supermarkets.

Interestingly, after years of consolidation was assumed to have led to a stable supply chain for milk, Clive Black of Shore Capital told the Financial Times that in liquid milk "competition now seems to border on the irrational."

The strategic importance of convenience stores to suppliers can only increase. Local shopkeepers will hope that suppliers like Robert Wiseman will continue to have the wherewithall to invest in their business too!
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