DAIRY FARM TO DISCONTINUE JAPAN SUPERMARKET VENTURE

5th February 1998 -- Dairy Farm International Holdings Limited, the international retailing and wholesaling group, today announced that the Company will discontinue its pilot Wellsave supermarket operation in Japan by the middle of 1998.

Wellsave is Dairy Farm's 60%-owned joint venture with Seiyu, one of Japan's leading retailers. The business presently operates fourteen supermarkets. Three of the supermarkets will close by the end of March and the company anticipates that the remainder will be closed by the middle of 1998.

When the Wellsave operation was first launched in September 1995 there was a perceived opportunity for discount supermarkets in Japan, operated in joint venture with a partner who could provide local market knowledge. "Since we first opened, a number of existing, conventional Japanese supermarkets have become aggressive low-cost promoters and have significantly weakened Wellsave's competitive advantage." said Dairy Farm's Regional Director for North Asia, Robert Neslund.

Mr. Neslund said that Dairy Farm's share of the trading loss in 1997 was some US$9 million and, the business was generating a recurring monthly loss of some US$1.2 million. The total estimated closure costs are US$40 million, which includes the losses that would arise during the closure process. Dairy Farm is providing fully for its share of the closure costs of US$24 million in its 1997 results.

Notes to the Editor