Saputo sell off: Fresh milk plants sold to Coles

Australia’s shrinking milk pool has forced Saputo into selling more assets, this time to Coles.

Lino Saputo Jr has been forced to sell off more assets in Australia.

Canadian dairy giant Saputo is selling its fresh milk manufacturing sites at Laverton North in Victoria and Erskine Park in NSW to Coles for $105 million, to “optimise” its operating model.

The deal is subject to Australian Competition and Consumer Commission approval and is expected to be finalised in the second half of the year.

The sites employ about 48 workers, who Saputo said would receive an offer to transfer their employment to the Coles Group.

Each plant has the capacity to process 225 million litres a year. Both are already used to manufacture Coles’ two and three-litre own brands.

The latest asset sale follows Saputo chief executive Lino Saputo Jnr’s comments last September that Australia’s shrinking milk pool had forced the company to reassess its operations, which then led to the closure of its Maffra plant and downsizing of its Leongatha and Mount Gambier operations.

In a statement released early this morning on the latest deal with Coles, Saputo stated it would “continue to have fresh milk products processed at these two manufacturing facilities” once Coles took ownership.

“SDA will work closely with its customers through the transition to ensure these changes have minimal impact and intends for its loyal consumers to continue enjoying its diverse range of dairy products,” the company reported.

“There will also be no changes to its valued farmer relationships, with suppliers’ milk continuing to be collected and processed throughout Victoria, New South Wales and Tasmania.”

Saputo’s international president Leanne Cutts said “as the Australian dairy industry landscape continues to evolve, this proactive measure aims to further adapt SDA’s manufacturing network and is designed to strengthen our market competitiveness”.

Mr Saputo said “we’re continually working to ensure we have the right manufacturing footprint and product offering to enhance our position as a high-quality, low-cost processor”.

“This marks an important step in executing our long-term vision for success in Australia as we maintain a sharp focus on efficiency to ensure we maximise the return on every litre of milk,” he added.