THE launch of a new supplier-owned milk brand in Coles supermarkets looks like good news for southern dairy farmers – but the supermarket milk price war shows no sign of abating.
In an interesting move, Coles has signed a five year deal with Warrnambool Cheese and Butter (WCB) to sell Great Ocean Road milk and cheese products.
Last September Coles awarded Bega Cheese the contract to supply its entire range of home branded cheese products for five years, with anticipated volumes of 19,000 tonnes annually.
The WCB deal takes the supermarket giant in a different direction, as WCB owns the brand Great Ocean Road but it signals Coles’ desire to develop close ties with processors as it pushes private labels ahead of major food company brands.
The new label appears positioned to take on the Pura milk label which is bottled by Japanese food giant Lion and heavily promoted in Woolworths supermarkets.
WCB chief executive David Lord said the listed company – 15 per cent owned by Bega – was very happy with the commercial agreement and suppliers were pleased.
“We’ve had a good response. It will mean increased intake, increased demand, we’ve added over 30 new suppliers from south western Victoria and South East Australia in the last six months,” Mr Lord said.
Fresh milk from the new range will only be available in Victoria but the cheese range, about 4000t annually, will be rolled out nationally.
Coles merchandise director John Durkan said the Great Ocean Road brand would launch with Tasty, Extra Tasty, Vintage and Light 500 gram cheddar cheeses, a tasty and light 500g shredded cheese and a range of milks including full cream, light, skim and flavoured.
Great Ocean Road products will only be available at Coles.
“It’s a good arrangement with us owning the brand but offering them exclusivity – joining forces with Coles gives us distribution we could not otherwise possibly get. It makes for a good partnership,” said WCB’s Mr Lord.
“It will be a premium quality brand, not a private label, not a house brand, and the ultimate retail price will be a matter for Coles.
“We are very comfortable with the commercial arrangements.”
Kerry Callow, president of United Dairyfarmers of Victoria – the dairy commodity group of Victorian Farmers Federation (VFF)– said the alliance would enhance confidence in the sector.
“It will result in increased demand for farmers’ milk, and increased demand is a sign that will return some confidence to farmers that there are opportunities,” she said.
“WCB has a close relationship with its supply base, it will broaden their product mix and balance their exposure to export and domestic markets, and they will have built in a steady, firm farmgate price.”
Australian Dairy Farmers president Chris Griffin welcomed news that WCB had struck a “fair and equitable contract price that was not to the detriment of dairy farmers”.
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