Bega Cheese is to close its Coburg cheddar and mozzarella cheese plant in Melbourne because its capacity and city location are not considered conducive to expected future company growth.
The plant, which makes cheese for Bega's private label and food service supply contracts, will close this week.
Some staff will be offered jobs at other Bega sites, but the company said redundancies would apply to many of those employed at Coburg.
Bega executive chairman, Barry Irvin, said the company would continue to develop its domestic and international cheddar and mozzarella cheese business via production from the company's other dairy sites and contracted manufacturing arrangements.
The Melbourne plant has been owned by Bega for the past decade.
However, a review of the company's network of production plants following its recent acquisition of the $250 million Koroit site from Murray Goulburn/Saputo in south western Victoria, found Coburg was not viably able to support Bega's growth expectations.
A decision regarding the sale and "full exit" from the northern Melbourne site would be made in "due course".
The company was not expecting to realise a sale value as high as Coburg's current book value.
Bubs powder deal
Meanwhile, Bubs Australia has entered into a long-term strategic supply partnership with Bega’s Tatura Milk Industries subsidiary to process its goat milk infant formula products.
The nutritional wet blending of raw milk with other ingredients, and subsequent spray drying, will be carried out at Tatura’s state-of-the-art northern Victorian site, then canned at Bubs’ existing licensed manufacturing partner, Australian Deloraine Dairy.
Bubs chief executive officer, Kristy Carr, said now Bubs had reached production and market scale it was delighted to partner with Tatura, one of Australia’s largest and most reputable infant formula manufacturers.
“Being able to produce our goat infant milk formula in a single step from farm gate is an Australian first for goat dairying," she said.
"That is only made possible because we have exclusive ownership of fresh goat milk from the largest milking goat herds in Australia."