The Murray Goulburn Co-operative (MG) has entered into a five-year national private label contract to supply Coles brand Australian cheese.
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 move is expected to generate around $130 million in additional annual sales and deliver a stable stream of profits to MG over the life of the contract.
MG says the competitiveness of its tender proposal for the cheese contract was enhanced by efficiency gains expected to flow from the investment MG is making to build a “world-class” cut-and-wrap consumer cheese processing facility at its Cobram cheese plant in Victoria.
MG plans to invest up to $145 million to significantly increase ‘ready-to-consume’ cheese capacity and capabilities at the new plant.
The announcement follows the 10-year partnership MG launched with Coles in 2014 to supply daily pasteurised milk for Coles private-label brands in Victoria and NSW.
“MG is pursuing a growth and value creation strategy to deliver profitable growth and insulation from the challenges of volatile global dairy commodity prices,” MG Managing Director Gary Helou said. “As part of this, we’re 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. “