Coles are planning to buy two milk plants in Sydney and Melbourne for $105m from Saputo. The plants were built by Murray Goulburn in 2014 and 2015 during its push into the Australian domestic fresh milk market. The factory in Melbourne cost $80m and the one in Sydney totalled $60m to build. Each facility has capacity to process around 225m litres annually and are primarily used to process Coles Own Brand 2 and 3-litre milk products. Saputo’s fresh milk products, including Devondale items, will continue to be processed at the two plants. Saputo employees at the sites will be offered employment with Coles.
Saputo had expressed concerns about the profitability of the two sites and 10-year Coles deal before completing its takeover of Murray Goulburn in 2018 and inheriting the plants. In 2019 Saputo announced it was trying to process more milk, and expressed dissatisfaction with the Coles contract terms. While Saputo found a resolution with Coles, it has continued to struggle with dwindling milk supply, and announced plans last year to streamline it Australian operations.
Coles CEO Steven Cain said the acquisitions would improve security of the retailer’s milk supply chain and help facilitate further growth opportunities. Coles said the transaction is unlikely to complete until the second half of 2023.