The dairy industry in Britain, where Avonmore Waterford is a serious player, got a bit of a surprise this week when Express Dairies chief executive, Mr Neil Davidson, was extremely forthright about the consolidation that the industry badly needs.
"We think the climate is there for consolidation. Just because it has gone quiet, the trail has not dried up. All the key players are still talking to one another," Mr Davidson said.
The problem in Britain is that there is too much milk chasing too little demand from the key retail multiples - 25 per cent too much according to Mr Davidson.
Rationalisation is badly needed if the dairy industry is to wrest the balance of power back from the multiples. The big question is who will bear the brunt of the rationalisation.
The industry in Britain is made of six big players - Unigate, Express, Robert Wiseman, Dairy Crest, MD and Avonmore Waterford - and the betting is that one of these will exit the industry and its plant capacity will be either much reduced or closed down altogether to bring the supply-demand balance back into kilter.
Given the good interim results this week from Express, Wiseman and Dairy Crest, and the comparative strength of Unigate and AWG, it would seem that the Danish-owned MD may be the one to bite the dust.
The investment in MD has been an unmitigated disaster for the Danes and there are many in the industry who believe that they would welcome the opportunity to disengage from an industry where margin pressure is so tight.
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