Bega Cheese to supply Coles’ home brand cheese products

Posted by AFN Staff Writers on 7th September 2011

Australia’s largest ASX-listed dairy company Bega Cheese has won the contract to supply the entire range of Coles’ home-branded cheese products.

The contract, announced yesterday, will involve Bega Cheese manufacturing and packaging natural cheddar, processed cheddar and mozzarella products for Coles, Australia’s second-largest retailer, under a five year contract. Initial anticipated volumes are set to be 19,000 tonnes a year.

Bega Cheese’s Chief Executive Aidan Coleman said, “While Bega already packs around 14,000 tonnnes of Coles’ retail cheese products for a third party, the new arrangement will see an additional 7,000 tonnes of bulk cheese being manufactured through its production facilities.

“Coles and Bega Cheese will now formalise proposed arrangements into a long term agreement. Subject to this formal agreement being signed, it is anticipated that Bega Cheese will commence its direct supply of cheese products in the third quarter of 2012. In anticipation of commencing the proposed arrangement, production and ageing of cheddar cheese will commence immmediately at the Bega Cheese Coburg facility, in Victoria,” Mr Coleman added.

“In addition to increasing its demand for milk by approximately 70 million litres, which is expected to be sourced from existing and new suppliers in New South Wales and Victoria, the additional volume of products to be supplied to Coles will help to optimise Bega Cheese’s embedded capacity and provide an increased return on its significant investment in infrastructure.”

Bega Cheese plans to manufacture the cheese products for supply to Coles at its facilities in Bega, in New South Wales, as well as Coburg and Strathmerton, both in Victoria.

Government Minister makes claims about Coles’ Bega Cheese deal

Federal Minister for Agriculture, Fisheries and Forestry, Senator Joe Ludwig has made a statement claiming that Coles’ Bega Cheese announcement is a testament to the Australian dairy industry’s ability to embrace change. Federal Government has been under pressure from Australian dairy farmers on a variety of fronts of late, including those farmers adversely impacted by the Coles home-branded milk price discounts.

The Minister’s statement point out that the dairy retail market is adapting to new economic circumstances and that the dairy industry is a resilient industry worth A$3.45 billion at the farmgate.

Senator Ludwig said, “I applaud Coles for this move – it’s great to see that more Australian product will be available on supermarket shelves.

“I am sure Australian consumers will be equally pleased to be able to purchase a product that supports Australian farmers and industry, with flow-on affects to rural communities.”

Bega Cheese announced its end-of-year results last week. The company’s profits dropped 11.4%, despite a near-12% increase in annual sales.