Murray Goulburn wins Coles cheese supply contract

Murray Goulburn has entered into a five-year national private label contract to supply Coles brand Australian cheese as part of MG’s ongoing push to secure critical mass in the Australian dairy foods market which will underpin and support the company’s growth plans.

The announcement follows a ten-year partnership that MG commenced with Coles in 2014 to supply daily pasteurised milk for Coles private label brands in Victoria and NSW.

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.

Approximately $130 million will be generated in additional sales per annum and will also deliver a stable stream of profits to MG over the life of the contract.

According to MG Managing Director, Gary Helou, the company aims to build a world-class cut and wrap consumer cheese processing facility at its Cobram cheese plant.

“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 percent controlled by Australian farmers,” Helou said.

“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.”

As part of its capital investment program, MG has announced plans to invest up to $145 million to significantly increase ‘ready-to-serve’ cheese capacity and capabilities at its new consumer cheese plant in Cobram.

“Cobram will deliver world-leading technology for processing and packaging a range of consumer and food service cheese products including block, slices, snacking and shred,” Helou said.

UPDATE: Fonterra offloads its Australian yoghurt business to Parmalat

Fonterra has announced it will sell its Australian yoghurt and dairy dessert business to Parmalat Australia.

The sale, which is conditional on regulatory and other approvals, is expected to be completed in the first half the of the 2016 calendar year.

The divestment of its Australian yoghurt and dairy desserts business, which includes manufacturing sites at Tamar Valley and Echuca as well as its Australian yoghurt and dairy dessert brands, is part of a comprehensive plan to return the Australian business to strong and sustainable profitability. 

Chief Executive Theo Spierings said these changes were the result of driving a clear strategic plan to transform the Australian business to deliver stronger returns to farmer shareholders and unit holders.

“We are focusing on areas where we can win in a highly competitive market, and that means optimising our product mix and streamlining operations to match, and investing in higher value add products that will deliver the best returns for our farmer shareholders and unit holders.”

“As a key part of our multi-hub strategy, we are matching these strengths with the opportunities across our 100 markets,” said Spierings.

Fonterra Managing Director Oceania Judith Swales said Fonterra is “totally committed to the Australian dairy industry”

“We will continue investing in programs and innovation that supports our market-leading brands in key retail categories, including Western Star butter and Perfect Italiano, Mainland and Bega cheeses, Anchor cream, and fresh milk.”

“Divesting the yoghurt and dairy desserts business will allow us to focus on what we do best, so we can continue delivering a competitive milk price to our suppliers, benefits to our customers, innovative dairy foods to our consumers, and improved returns to our farmer shareholders and unit holders,” concluded Ms Swales.

According to a Fonterra spokesperson, the decision to sell our Australian yoghurt and dairy dessert business is part of a comprehensive plan to return Fonterra’s Australian business to strong and sustainable profitability.

"The sale will allow us to focus on what we do best, and lock in our competitive position in the Australian market – we will focus on investing in the growth of our other market-leading brands, including Western Star, Perfect Italiano, Bega, and Mainland, and our recently launched Anchor brand."

"It’s no secret our yoghurt and dairy desserts business has been challenged in recent years," the spokesperson said."

"Our people have worked hard to improve the returns from our yoghurt and dairy dessert business, and their efforts have resulted in good performance from Tamar Valley and agreements achieved with key customers to drive volume and category growth. It is a sign of respect for their hard work that all employees at our Echuca and Tamar Valley plants have received offers of employment from Parmalat."

"This sale will have no impact to our Anchor or Riverina Fresh yoghurt, which we produce in foodservice format at our Wagga Wagga facility, nor will it impact our New Zealand yoghurt business."

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