Dairy Crest in Clover over top range sales

Dairy Crest, the company behind Clover and Cathedral City, has seen sales growth at its five top-selling brands more than double on the back of higher prices.

The group yesterday reported an 11 per cent hike in sales of its key brands - Cathedral City, Country Life, St Hubert Omega 3, Clover and Frijj - in the three months to the end of December, compared with 5 per cent in the half-year to September.

It said 8 per cent of the growth came from inflation and 3 per cent from increased sales volumes as it faced rocketing costs of milk, vegetable oil and other oil-related products.

The dairy giant, like most of its peers, has been raising its selling prices where it can to recover some of the increases, but is also cutting costs - targeting more than 20 million of savings this year. It has started using the internet to tender for suppliers as part of this cost-cutting drive.

Chief executive Mark Allen said input prices were likely to have peaked but could remain high for some time.

The UN's Food and Agricultural Organisation warned this week that world food prices had jumped to their highest level since records began in 1990. It said rises were particularly high for dairy products, up 6.2 per cent in January compared with a month earlier.

Dairy Crest is also being affected by intense competition in the milk market.

Investec retail analyst Nicola Mallard cautioned it was "imperative" the firm recovers extra costs through the market, with a recently agreed 1p per litre increase to its milk farmers adding to the inflation pressure.

She is forecasting that pre-tax profits in the year to the end of March will edge up to 86.8 million from 83.5m.