Murray Goulburn has lost contracts to supply cheese, UHT milk, adult milk powder and cream to Woolworths Ltd, Australia’s largest grocer.
The Australian dairy and infant formula co-op said the deals had come to an end after “a competitive tender process”.
In an announcement to the Australian Stock Exchange, Bega Cheese said it had secured a contract to supply “a significant component” of Woolworths own-label cheese from January.
Separately, Freedom Foods Group said its deal to supply the retailer with UHT milk would start later this year.
It was not clear at the time of writing which companies would take on Murray Goulburn’s adult milk powder and cream contracts. Woolworths could not be reached for immediate comment.
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By GlobalData
Murray Goulburn said the end of the contracts would lead to the loss of around AUD108m (US$81.7m) in revenue each year. The company said the financial impact in its new financial year, which started last month, from the end of the contracts would be “limited, given [the] timing of existing contracts completing”.
The co-op said it had retained contracts to supply the retailer with butter and mozzarella shred cheese.
Interim CEO David Mallinson said “MG continues to enjoy a strong ongoing relationship with Woolworths and they remain a valued partner for our co-operative. We believe our tender to retain this business was competitive, whilst balancing acceptable returns for our products given the current environment for our farmer/suppliers and investors.”
Mallinson took the helm at Murray Goulburn in April after the departure of MD Gary Helou. The exit of Helou was announced alongside a profit warning – Murray Goulburn’s second in two months – and a move to cut the price it pays farmers for milk. Murray Goulburn has felt the pressure from the low prices of dairy commodities in recent quarters.
