Coles-brand milk in NSW, Victoria to be processed in-house in $105m deal

Coles’ own brand milk sold along the east coast will be processed in-house after the supermarket secured approval to acquire two milk-processing facilities from Canadian-owned Saputo Dairy Australia for $105 million.

The two facilities, based in Victoria’s Laverton North and NSW’s Erskine Park, process about 225 million litres a year, 80 per cent of which is bottled as Coles’ two- and three-litre private-label milk.

The move will strengthen resilience in Coles’ milk supply chain and improve security of milk supply, said Coles chief executive Steven Cain, who described the facilities as state of the art and delivering exceptional production efficiency.

“These facilities also have sufficient capacity to facilitate further growth opportunities through new product innovation,” said Cain.

Saputo, which produces dairy products including Devondale, Cheer, Mersey Valley and Cracker Barrell, is Australia’s largest dairy processor. As part of the agreement, Saputo will continue processing its milk products at the two manufacturing facilities.

The announcement is expected to have little impact on customers.

The two sites’ 48 employees will receive offers to transfer their employment to Coles. Existing relationships with farmers will also not be affected by the acquisition.

Saputo Dairy put the two processing facilities up for sale in order to “further optimise its operating model”, the company said in a statement.

“As the Australian dairy industry landscape continues to evolve, this proactive measure aims to further adapt [Saputo’s] manufacturing network and is designed to strengthen our market competitiveness,” said Saputo international chief operating officer Leanne Cutts.