Australian dairy firm Bega Cheese is to produce all of Coles’ own-label cheese products.

The deal, announced today (6 September) 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 around 19,000 tonnes a year.

“In addition to increasing its demand for milk by approximately 70m 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,” the company said.

Bega Cheese anticipates that further financial details will be released when a formal contract is finalised in approximately two months.

Last week, the company, which listed in Australia two weeks ago, announced its full-year profits slid 11.4%, despite a near-12% increase in annual sales.

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