A surge in sales to China has helped drive turnover past the £25m mark at Knutsford-based Delamere Dairy.

Co-founder Liz Sutton said that the company is delighted that its strategy to target the Far East is delivering significant sales as the domestic market suffers from slow growth and potential price deflation.

The latest set of accounts for Delamere Dairy show that the business posted a turnover of just over £25m in the 2014 calendar year, up from £21.8m in the prior year. UK turnover climbed to £20.5m from £19.6m, rest-of-Europe turnover decreased to £249,082 from £536,787, and rest-of-world turnover jumped to £4.3m from £1.7m.

Pre-tax profits rose to £269,194 in 2014 from £180,256 in 2013.

Liz Sutton, co-founder and director of Delamere Dairy, said: "Faced with a home market challenged by slow growth and potential price deflation, we are delighted that our strategy to target the Far East by opening an office in Hong Kong in 2011 started to deliver significant sales in 2014.

"With strong foundations now in place, particularly in China, we are developing a number of initiatives in South-East Asia which will continue to broaden the scope of our business whilst maintaining our position as leaders in speciality dairy in the UK market."

In their report accompanying the accounts, the directors said: "Turnover increased by just under 15 per cent in 2014 due in the main to an increase in sales to China from £1.6m in 2013 to approximately £4.17m. Whilst gross margin continued to be squeezed, the company was able to implement efficiency savings in the business resulting in an increase in the operating profit of just over 55 per cent.

"The first half of 2014 saw a fruitful consolidation of the business established over the preceding two years in South-East Asia, principally China. The second half was marked by an abrupt interruption to the demand for imported dairy products to China due to a massive overestimation of demand by the importers.

"This problem was widely experienced by the European dairy exporters. Difficult trading conditions in the UK prevailed for the whole of the 2014 with most of our largest customers, the grocery multiples, under pressure to compete with the rising popularity of the discounters and thus unable to accept price increases in line with our cost increases."

Delamere Dairy was founded by Liz and Roger Sutton in the Delamere Forest in 1985. The business produces a range of dairy products spanning goat's milk, goat's cheese, goat's yoghurt and cow's milk.

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