Wincanton Ireland is taking legal action against Kellogg in the Dublin High Court to prevent the loss of a lucrative distribution contract.

The logistics firm has provided warehouses and transport to Kellogg for some years, and also has contracts with other major companies such as the Musgrave Group and Superquinn. But the cereal giant, which has a 60% share of the Irish market, is planning its own distribution system and wants to end the current arrangement.

Wincanton has already won an Irish High Court order preventing Kellogg from terminating the contract until the issue has been decided at a full hearing. That is set to take place in the autumn and executives from both sides have already lodged affidavits.

The dispute stems from a decision by Kellogg to set up an operations centre in Swords, County Dublin, to service part of its European market. The centre, backed by the Irish Industrial Development Authority, employs 80 staff and is intended to take over distribution from Wincanton.

A Kellogg spokeswoman said: "Due to significant cost increases imposed by our current logistics provider, Kellogg expects to change its provider from Wincanton to STL Logistics within Ireland in the coming weeks."