Adams Foods has scored a major coup over Arla by winning the contract to supply Iceland’s own-label range of hard cheeses.

From 1 February, Adams - which owns the Pilgrims Choice and Mu cheese brands - will supply all of Iceland’s own label hard cheese, from mild through to extra mature Cheddar as well as British regional cheeses, to its 779-strong UK store estate.

The contract loss is a major blow to Arla because it comes shortly after its merger with Milk Link in October last year, which brought the Iceland contract with it.

The deal was very much a “supply partnership” with Adams Foods, which operated out of a state-of- the-art cheese packing facility and had second-to-none technical and cheese grading capabilities, a spokesman for Iceland said. “They also have excellent category and innovation expertise and we look forward to working with them to help grow the Iceland brand and cheese category for the future benefit of our customers.” He would not be drawn on supply volumes but confirmed that Cheddar supply would include “a mix of British and Irish Cheddar as current.”

A spokeswoman for Arla said it would not comment on relationships with its customers.

Adams did not wish to comment, deffering instead to Iceland.

The Iceland contract is the latest major retailer contract win by the Irish Dairy Board - Adams’ ultimate owner. In November, Tesco announced a £16m deal with the IDB to supply butter to its stores across Eastern Europe.

Despite losing the Iceland cheese contract, Arla won the contract to supply Sainsbury’s own label cottage cheese, commencing supply in October last year. It was previously supplied by First Milk, through its Kingdom Dairy operation.