Sainsbury’s Dairy Development Group

Dairy Farmer

Our Sainsbury’s Dairy Development group (SDDG) consists of over 290 farms and supply us with 97% of our “By Sainsburys” fresh milk. Our Development Groups are practical working partnerships where we discuss challenges and opportunities, and how we can work together to share best practice to ensure our supply chains are environmentally sustainable, ethical and fit for the future.

Our cost of production model (COP) was voted for by the majority of our farmers & sets the price Sainsbury’s pay for milk independently. The model was introduced in 2012 & ensures that our SDDG farmers receive a fair price for their milk.


We set up the Dairy Development Group in 2007. The goal of the group is to work in partnership with our dairy farmers who supply us with fresh liquid milk and deliver a sustainable sourcing model that drives production efficiencies through improved animal welfare and reduced environmental impact.


In 2008 the SDDG pioneered the first carbon footprint measurement system of its kind in the dairy industry. This is the first agricultural carbon footprinting model to be certified by the Carbon Trust and to achieve compliance with PAS 2050 (a supply chain measurement specification established by Defra and BSI British Standards). It has the potential to reduce farmers' energy costs and, as a result, improve their overall farm efficiency.


In 2009, Sainsbury’s launched the Dairy Development Group in Northern Ireland to help strengthen further the partnership between the supermarket and the local milk sector. This group consists of a dedicated pool of dairy farmers producing milk specifically for Sainsbury’s stores in Northern Ireland.


After a majority vote, the group moved to the cost of production pricing model unique to dairy farmers supplying Sainsbury’s with fresh liquid milk. Rather than being paid a price set by the open market, this model makes sure that the price we pay our farmers for the milk they produce reflects farmers’ costs and is set by an independent consultant.

Actual financial data collected annually from our dairy farmers by the consultant forms the basis of the model. This means that our farmers get a guaranteed price that takes into account their costs independent of the retail price of milk.

However, we know that feed, fuel and fertilizer costs are the most volatile for a dairy farmer and fluctuate on a regular basis. As a result, every three months our pricing model is updated to reflect any recent increases and decreases using data published monthly by DairyCo (and independent industry body).

As well as covering costs of production, the model also includes a profit element which can be used by the farmer to re-invest into their businesses. There is also a bonus for those farmers who consistently meet the high health, welfare and environmental standards we set for the group. 


2014 will be remembered as a historic year for the group as we implemented a bespoke supply chain for Sainsbury’s milk to ensure that all the milk produced on our dairy farms only goes into the fresh liquid milk cartons we sell in our stores. On the front of our milk bottles a blue SDDG logo now symbolizes to customers that the milk in our bottles comes from the cows on Sainsbury’s Dairy Development Group farms.


Working with our clothing team, we developed our very own calf coats! These have proven benefits to improve the health and growth rates of calves during their first few weeks of life when their much smaller bodies can prioritize using energy for growth rather than keeping warm. 

The current price is 30.82ppl (set on 1st October 2015).


About the article

  • Posted on: 01 January 2009
  • Type of article: Case study