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The contract loss comes after First Milk lost Asda contract

First Milk has lost its own-label Cheddar contract with Morrisons, with Lactalis McLelland believed to have picked up the business.

None of the companies would comment, but market rumours suggest the volumes involved are in the region of 6,000 to 12,000 tonnes.

Under the contract, First Milk supplied bulk Cheddar to Morrisons’ Farmers Boy arm; it is understood The Co-op will continue to supply own-label Cheddar to Morrisons for another two months or so before Lactalis takes over.

The contract covered Morrisons’ British own-label Cheddar, with the exception of mild.

Last summer, Morrisons and First Milk launched a new pricing formula for farmers supplying milk into Morrisons’ own-label mild Cheddar via First Milk. This is being trialled for 12 months, and Morrisons said First Milk would therefore continue to supply it with mild Cheddar until the formula was reviewed in July.

It is not clear if it will continue with the formula beyond July. “No decision has been made on what will happen once the trial has been completed,” a spokesman for the retailer said.

First Milk last year struck a strategic partnership with Adams Foods, under which Adams will cut and pack First Milk’s hard cheese. The deal was recently cleared by the Office of Fair Trading, and a spokesman for Adams said it would not be affected by the Morrisons contract loss.

The loss of the Morrisons’ Cheddar business comes after First Milk last year lost a major Asda Cheddar contract to Arla. It subsequently announced the closure of its packing plant in Maelor, West Wales.

Lactalis is the world’s largest cheese producer. It supplies own-label and branded cheese in the UK, including Seriously Strong Cheddar.