The Allansford processor announced yesterday it will buy Lion Dairy’s cheese business, a subsidiary of Japanese-owned Kirin, which has a significant stake in WCB.

The historic move will fuse together WCB’s processing site with Lion’s adjacent cut-and-wrap facility and give the milk processor unprecedented retail power. 

More than 170 staff employed by Lion Dairy will now be on the WCB payroll as part of the deal, which will consolidate cheese production at the Allansford site.

WCB chief executive David Lord said the deal would make the company one of the biggest players in the national supermarket sector.

He said Cracker Barrel and Coon were much-loved brands that held a sizeable share of the cheddar market, complementing the fledgling Great Ocean Road cheese lines.

“This represents a 25 per cent expansion in Warrnambool Cheese and Butter’s operations,” Mr Lord said. 

“It also means a streamlining of production in that WCB will be right along the processing line from the manufacture of the product to the cut-and-wrap, right through.”

The cut-and-wrap operations of Lion Dairy are located in a building owned by WCB adjacent to its Great Ocean Road factory at Allansford.

Mr Lord said it was too early to say whether the deal would equate to extra jobs but added that existing workers would be retained. Yesterday’s stock exchange statement said the $137 million pricetag was subject to the final determination of the inventory amount and assumed liabilities amount.

The statement also made clear that the purchase was subject to WCB shareholder approval.

A shareholder meeting is likely to be held in late April or early May to consider the transaction.

Coon Cheese has been produced at Allansford since 1946 when Kraft established a manufacturing base in the region. 

Kraft’s suite of cheese brands were sold to Dairy Farmers in December 1997 then to National Foods in November 2008.

“These are strong, iconic brands that are known right across Australia,” Mr Lord said. “Coon Cheese is dominant in natural cheddar slices, it’s the number one-selling brand.

“Cracker Barrel is number one in vintage cheddar blocks. Mil Lel is number two when it comes to parmesan sold nationally.”

It is the first major deal since the processor was acquired by Canadian dairy processor Saputo in February 2014 after a long race for ownership against rival Murray Goulburn.

Mr Lord said the Lion Dairy deal showed Saputo was keen to invest and expand WCB and was committed to jobs at Allansford.

“Saputo management were adamant right through 2013 and 2014 that they want to see WCB grow and this is proof,” he said.

Lion Dairy managing director Peter West told Fairfax Media yesterday his struggling division will use the $137 million from the sale to invest in fast-growing brands. 

“We just felt we were better off investing in other categories with higher growth,” Mr West said.

A COMMON feature in household refridgerators nationwide, Warrnambool Cheese and Butter is set to own several dairy brands that have been loved by generations.

The expected deal, announced yesterday, will mean WCB will own four cheese brands by mid-year including:

Coon Cheese:

Named after Philadelphia-born cheesemaker Edward Coon, the American cheese was patented in 1926 and first made in Australia in 1935. Coon Cheese has been produced at Allansford since 1946, along with Quinalow in Queensland, but is now solely produced in the south-west.

Cracker Barrel:

An American brand launched by Kraft in the United States in 1954, the cheese has been sold in Australia for the past four decades. Branded as having an "extra-sharp taste," it is also popular in Canada. The WCB-made cheese will not be sold in North America.

Fred Walker brand:

Mainly shredded cheese. The Fred Walker brand is named after a Melbourne industrialist who teamed up with the American Kraft company in the 1920s. Walker was also known for helping to make Vegemite a commercially-successful product.

Mil Lel brand:

Named after a sparsely populated district north of Mount Gambier, Mil Lel brand covers speciality cheeses. The brand has been in operation since 1911 and was taken over by Kraft in 1951. A cheese-making facility owned by WCB operates near the Mil Lel district.