The 132-year-old King Island Dairy is one of Australia's most well-known cheese brands, but Canadian owner Saputo Inc has found that sentimentality over its historic legacy has not been enough to make the product economically sustainable.
Saputo Dairy Australia (SDA) has undertaken an intensive review of all commercial and financial alternatives for King Island Dairy over the past 10 months, including a potential sale to a third party, but yesterday made the "difficult decision" to close its facility and retire the brand in mid-2025.
Saputo took ownership of the brand as part of a $280 million purchase of the specialty cheese business of Lion-Dairy and Drinks in King Island and Burnie in 2019, with other brands such as South Cape, Tasmanian Heritage and Mersey Valley included in the deal.
Other Australian cheese brands in the Canadian multinational's portfolio include Devondale, Cracker Barrel, Cheer and Mil Lel
SDA reports that 58 impacted employees have been informed of the decision, and where possible it has identified redeployment opportunities.
Saputo Inc's president and chief operating officer (International and Europe), Leanne Cutts, says this decision has not been taken lightly. After thoroughly reviewing "every possible option", a closure of the facility was determined as the most viable way to strengthen SDA’s competitiveness based on changing industry and market conditions.
"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," Cutts says.
"We have invested more than $40 million 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.
"This decision does not reflect the commitment of our hard-working and dedicated King Island employees and dairy farmers. The King Island community has done everything they can to support us and we will continue to work collaboratively with the Tasmanian Government."
Cutts says SDA remains firmly committed to Australia and will continue to invest in North-West Tasmania, as well as its other operating and supply regions, to deliver on a vision for long-term success in the country.
SDA claims it will consult with employees, union representatives, dairy farmers, customers, King Island Council and the Tasmanian Government to discuss the impacts of this decision and ongoing transition support. In the interim, King Island Dairy will continue producing its specialty cheeses as the business develops a closure transition plan.
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