Dairy Crest cheese cheer

DAIRY CREST, smarting from the loss of two major supermarket milk contracts, today attempted to reassure investors its main brands like Cathedral City cheddar and Country Life butter were thriving.

Shares in the company crashed almost 17% after it was dumped by Tesco last month, soon after it lost Asda.

All eyes are now on its third of the £150m Morrisons/Safeway contract, probably up for renewal in the new year. Chief executive Drummond Hall said: 'We are in there punching and have as good a chance as anybody.'

Analysts are concerned its lack of presence in the North could lead Yorkshire-based Morrisons to end the relationship.

Milk traditionally generates 5%-10% of Dairy Crest profits compared with its branded spreads, which contribute 40%.

The new creamery at Davidstow was successfully commissioned on schedule. Davidstow is now the biggest cheese plant of its kind in Europe and capable of processing up to 55,000 tonnes of cheddar every year.

Today's half-year trading update revealed that a promotion push saw Cathedral City sales rise by at least 10%.