As the new supplier, Bega will manufacture and pack a range of dairy products including cheese, UHT, adult milk powder and cream.
Murray Goulburn retains the contract to supply private label mozzarella shred cheese and the contract to supply private label butter, which has been expanded to include additional products and increased ranging.
The dairy co-operative said it will lose $108 million in revenue, but the impact on its fiscal 2017 results will be limited because it plans to “redirect this capacity to other markets”.
“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,” Murray Goulburn interim CEO David Mallinson said.
He added that the company’s Devondale and Liddells products are not hurt by this decision and continue to be available at Woolworths nationally.”
A media spokesperson from Woolworths told Inside FMCG:
“Woolworths has entered into new supplier arrangements following a competitive process across a number of categories. From January next year Bega Cheese Limited will be supplying our private label cheese products. In other categories, such as cream, we have looked to align like producers with local markets. For example, In Queensland our supplier will be Parmalat, Victoria is Fonterra and the other states will be supplied by Bulla. We look forward to delivering new products to our customers through our private label brands through these new suppliers.”