Australia’s dairy industry is in need of a new champion, but instead has turned to supermarket giant Coles to fill the void. The four major dairy companies – Fonterra, Saputo, Lactalis and Bega – are either retreating, considering retreat or moving up the value chain, leaving few if any potential buyers.
Coles has taken control of Saputo’s two major milk processing plants in Victoria and New South Wales for $105 million, which will provide the supermarket with greater certainty of milk supply and supply chain resilience in the dairy sector.
The move may also provide Coles with the opportunity to work on new dairy products, following the launch of its direct-to-farmers sourcing model in 2019. However, with milk production falling as farmers abandon the industry, and the Australian Competition and Consumer Commission investigating supermarkets and their milk offerings, the move could be seen as controversial.
The sale of the processing plants also raises concerns about the future of Australia’s dairy industry, particularly as three other major players are re-considering their futures.
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