Murray Goulburn (MG) announced that Woolworths has selected a new supplier to manufacture and pack a range of its private label products including cheese, UHT, adult milk powder and cream.
The co-operative – which retains the contract to supply private label mozzarella shred cheese as well as the contract to supply private label butter – said the revenue loss stemming from Woolworths’ announcement will be approximately $108 million.
MG’s interim Chief Executive Officer, David Mallinson said the financial impact on MG in FY17 will be limited given timing of existing contracts completing.
He said the company will adjust future manufacturing planning to redirect this capacity to other markets, limiting future revenue and earnings impacts.
“MG continues to enjoy a strong ongoing relationship with Woolworths and they remain a valued partner for our co-operative,” Mr Mallinson remarked.
“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. I can also re-assure our valued consumers that ranging of MG’s Devondale and Liddells products are not impacted by this decision and continue to be available at Woolworths nationally.”