MG loses out to Bega

MURRAY Goulburn will take a $108 million hit to its revenue annually, after losing its contract to provide a range of private label products to Woolworths.
MG will no longer be contracted to supply Woolworths with cheese, UHT milk, adult milk powder and cream.
The cooperative has retained the contract to supply private label shredded mozzarella and private label butter to Woolworths. Bega Cheese has reportedly picked up the cheese contract, while Woolworths has awarded the other contracts to a range of dairy companies, including Fonterra, Freedom Foods and Bulla.
This blow comes after a tumultuous 12 months for the farmer owned cooperative.
Since MG listed its unit trust on the stock market last July, it has downgraded profits, slashed the farmgate price, lost key executives and attracted a class action over alleged misleading statements.
The company said due to the timing of contracts, the impact on this financial year will be limited.
MG will adjust future manufacturing planning to redirect this capacity to other markets, limiting future revenue and earnings impacts.
MG interim chief executive officer David Mallinson said in a statement, “MG continues to enjoy a strong ongoing relationship with Woolworths and they remain a valued partner for our cooperative.”
“Devondale and Liddells branded products are not impacted by this decision and will continue to be available at Woolworths nationally.”
Hazel Park dairy farmer and Murray Goulburn supplier Kelvin Jackson said it will take time to realise the full impact of the contract loss on the cooperative.
“As I understand it, it’s next year that MG loses the cheese contract to Bega, so I guess they have some time to replace it,” he said.
“I think export to Japan would be their first choice. Time will tell what impact it will have, depending on what other markets they can secure.”

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Posted by Sarah Vella on Aug 2 2016. Filed under Rural News. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry