Canadian dairy major Saputo has confirmed its King Island Dairy operation in Australia is to close.
The Tasmanian operation has been under review since last November and today (5 September) Saputo announced it will close the facility and retire the associated cheese brand in mid-2025.
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Some 58 employees will be impacted by the decision.
In a statement, Saputo said: “Over the past ten months, Saputo Dairy Australia (SDA) has sought to maximise value for the business by conducting an intensive review of all commercial and financial alternatives for King Island Dairy, including a potential sale to a third party.
“SDA’s immediate focus will be to work with its valued King Island employees, dairy farmers and the broader King Island community to support them through the transition period.”
Leanne Cutts, the president and chief operating officer for Saputo’s international and Europe divisions, said the decision had been taken “after thoroughly reviewing every possible option”. She added the closure of the facility was determined as “the most viable way to strengthen SDA’s competitiveness based on changing industry and market conditions”.
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By GlobalDataCutts said: “As King Island Dairy’s historic roots are deeply embedded in the region, it was hoped the strategic review would identify a potential buyer for the facility. It is a unique brand, with a plant that is nearly 100 years old and designed to produce hand-made specialty cheeses.
“We have invested more than A$40m ($26.9m) in all our Tasmanian operations over the past five years. While our other Tasmanian brands such as Mersey Valley and Tasmanian Heritage are thriving, and King Island Dairy products hold a nostalgic place in the hearts of Australians, the brand has not maintained its position in today’s ultra-competitive food industry.”
Cutts said Saputo remains “firmly committed to Australia and will continue to invest in north-west Tasmania, as well as our other operating and supply regions, to deliver on our vision for long-term success here”.
The company said that, where possible, it will identify redeployment opportunities for the affected employees.
Announcing the review of the King Island Dairy operation in November, Saputo said it was part of a wider examination of its manufacturing network in an attempt to cut costs and boost efficiency.
Saputo’s moves have included closures in Australia and in North America. In June, it said it was to shut six sites in the US by early calendar year 2025.
The company has also struck a deal to sell other sites in Australia. Last December, the Australian Competition and Consumer Commission (ACCC) said it did “not oppose” the national retailer Coles Group’s proposed purchase of two milk processing plants owned by Saputo – Erskine Park in New South Wales and Laverton in Victoria.
