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August 1, 2016updated 10 Apr 2021 5:52pm

Murray Goulburn loses Woolworths contracts to Bega Cheese, Freedom Foods Group

Murray Goulburn has lost contracts to supply cheese, UHT milk, adult milk powder and cream to Woolworths Ltd, Australia's largest grocer.

By Dean Best

Murray Goulburn has lost contracts to supply cheese, UHT milk, adult milk powder and cream to Woolworths Ltd, Australia’s largest grocer.

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The food and grocery sector thrived during the pandemic, largely due to the shutdown of the food service industry and the sector’s subsequent necessity, panic-induced bulk purchasing, and spending more time at home. The market has grown as a result of inflation. Consumer unwillingness to go out and socialize, and the reopening of several hospitality facilities, helped maintain the demand for groceries, particularly online, in 2021. As consumer behavior changes, we consume more food and drink at home, and inflation increases basket sizes. GlobalData predicts that the sector will continue to hold a higher share than had been predicted prior to the pandemic. This is true despite the fact that the food and grocery sector's share of overall retail will decline from its peak in 2020. This report will discuss market forecasts and key themes in the global food & grocery industry in 2022 and beyond. It covers:
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  • Five-year forecasts and the impact of COVID-19
  • The performance of the online channel versus offline
  • Major trends in the market including rapid delivery, ambient retailing, supply chain disruption, and inflation
Assess developments within this sector to help your business thrive in 2022 and beyond.
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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.

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.

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Free Report
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What’s the forecast for the food and grocery industry?

The food and grocery sector thrived during the pandemic, largely due to the shutdown of the food service industry and the sector’s subsequent necessity, panic-induced bulk purchasing, and spending more time at home. The market has grown as a result of inflation. Consumer unwillingness to go out and socialize, and the reopening of several hospitality facilities, helped maintain the demand for groceries, particularly online, in 2021. As consumer behavior changes, we consume more food and drink at home, and inflation increases basket sizes. GlobalData predicts that the sector will continue to hold a higher share than had been predicted prior to the pandemic. This is true despite the fact that the food and grocery sector's share of overall retail will decline from its peak in 2020. This report will discuss market forecasts and key themes in the global food & grocery industry in 2022 and beyond. It covers:
  • Market drivers and inhibitors
  • Five-year forecasts and the impact of COVID-19
  • The performance of the online channel versus offline
  • Major trends in the market including rapid delivery, ambient retailing, supply chain disruption, and inflation
Assess developments within this sector to help your business thrive in 2022 and beyond.
by GlobalData
Enter your details here to receive your free Report.

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