Coles will end its supply contract with Bega Cheese for its private label cheese from next year, announcing a new five-year deal with Murray Goulburn.
The supermarket giant entered a five-year agreement with Bega Cheese to manufacture and package its home brand cheese in January 2012. Its new contract with Murray Goulburn will begin from January 25, 2017.
The announcement follows a 10-year partnership deal struck between Murray Goulburn and Coles in 2014 to supply daily pasteurised milk for Coles private label brands in Victoria and New South Wales.
The contract includes the supply of a range of Coles brand cheddar-style cheese including tasty, colby, mild and light cheese in blocks, shreds and slices for Coles supermarkets across Australia. The national cheese contract will generate around $130 million in additional sales per annum.
In a statement Bega said it would redirect its milk supply to other dairy products and markets including its rapidly growing infant formula and nutritionals platform.
Murray Goulburn MD, Gary Helou, said: “We are delighted to extend our existing relationship with Coles and its customers to deliver the quality, taste and freshness of cheese made by Australia’s largest dairy farmer co-operative, which is 100 per cent controlled by Australian farmers.”
“MG is pursuing a growth and value creation strategy to deliver profitable growth and insulation from the challenges of volatile global dairy commodity prices. As part of this we are ramping up our manufacturing capability and capacity to produce and market a wide range of Australian made ‘ready to consume’ dairy foods for our domestic and international markets.
“This additional Coles business complements our investment strategy to build a state of the art supply chain and adds to our critical mass here in Australia, as we look to substantially grow our business internationally.
“In particular, investment at our Cobram facility in Northern Victoria will deliver world-leading technology for processing and packaging a range of consumer and food service cheese products including block, slices, snacking and shred.
“Ultimately these investments are being made to support our drive to deliver sustainably higher and more stable farmgate prices and returns over the long term,” Helou said.