Camperdown Dairy-branded milk will disappear from supermarket shelves when its old factory closes, but the company says it is actually good news with production ramping up at its new site.
Australian Dairy Nutritionals Group chief executive officer Peter Skene said about three people would be made redundant when it shuts the doors on the former Camperdown Bonlac factory site on the Princes Highway.
Inflationary pressures and the impact of COVID-19 has been blamed for the demise of the product, with the company shifting its focus to producing powdered products at its brand new plant north of Camperdown.
"On the outside it sounds like a negative story but it's a positive one," Mr Skene said.
"We are moving out of a place that we currently lease into a place that we own and we're ramping up production in the new facility."
Mr Skene said Camperdown Dairy had moved into the old Bonlac site in 2010, and only started the brand about six years ago.
He said ever since COVID-19 hit, the company's future at the old site had been uncertain.
Prior to the pandemic, the site "looked like it had a reasonable future" but COVID-19 made it difficult to operate with staff issues and freight costs impacting the business.
Popularity of its yoghurt products produced at the factory also took a dive.
"We were doing massive volumes of squeezies that kids would put in their lunchboxes... when COVID hit they virtually stopped. Likewise for little tubs," Mr Skene said.
The old factory also needs a "considerable" amount of money spent on maintenance and upgrades, he said.
"At the same time costs have gone through the roof," Mr Skene said. The price of milk had jumped 25 to 30 per cent while packaging and freight costs had also risen.
"It's really been a lot of pressure," Mr Skene said. "It didn't make sense" to continue to run the site, he said.
With unemployment rates so low and job vacancies high, Mr Skene said if ever there was a time to close the facility it was probably now.
"We've actually struggled to maintain enough staff to keep running anyway," he said.
Mr Skene said the company was surprised by the brand recognition across Melbourne with its milk being sold in 80 per cent of Woolworths stores across the state as well as in coffee shops in Melbourne, Geelong and Ballarat.
However, he said there were plenty of competitors to bridge the gap in that space.
The company has spent the past two years investing $8 million in its new site on the corner of Geelong and Depot roads.
"It's a second-hand infant formula plant which is in very good condition that has been relocated from overseas and installed in a purpose-built facility," Mr Skene said.
"Really what we're doing is closing the old one and opening the new one at the same time."
The company started manufacturing organic A2 whole milk powder at its new site about two weeks ago, then a week later organic A2 skim milk powder.
"About a week ago, we started production of Australia's first organic A2 infant formula made with Australian milk directly from our farm," Mr Skene said.
The products would be canned late next month before going onto Chemist Warehouse shelves across the country in September/October.
"There's lot of exciting things in the pipework for us," he said.
However, Mr Skene said he was sad to be moving out of the old factory where he started work as a 17-year-old about four decades ago.
"It is pretty run down now and it's time to move to the brand new one," he said.
Mr Skene said the company was focused on its big picture strategy of driving infant formula forward and getting much better returns.
Other dairy businesses have been eyeing off the old Bonlac factory site which will be vacated when production of fresh milk ceases.
Mr Skene said it had been talking to a number of different businesses that were interested in going into the old and those businesses were keen to keep the equipment and start a different dairy business.
"We're very supportive of that," he said.
Our journalists work hard to provide local, up-to-date news to the community. This is how you can access our trusted content:
Now just one tap with our new app: Digital subscribers now have the convenience of faster news, right at your fingertips with The Standard:
Have you signed up to The Standard's daily newsletter and breaking news emails? You can register below and make sure you are up to date with everything that's happening in the south-west.
Sign up for our newsletter to stay up to date.