Lion has confirmed it is back in business in market milk sales by winning key Coles contracts from Parmalat in South Australia and Western Australia.

The contract wins are both relatively small, but highlight the fact Lion wants to be a key player in the house-brand milk market.

It also comes as the market is talking up rumours Lion is boosting volumes in readiness to sell the dairy business.

Lion disputes the market chatter.

The big contract outstanding is to supply Woolworths in NSW with house-brand milk in a $100 million lon- term contract.

NSW is another Parmalat contract and Lion has publicly confirmed it is a bidder for that contract which has now been up for grabs for over three months.

Other bidders include Murray Goulburn, which wants to use the same plant it uses to supply Coles in NSW.

Lion’s re-entry into the game follows a series of losses, including to Murray Goulburn for Coles in NSW and Victoria.

Lion had indicated at the time it was not chasing milk volume at any price, but this statement is tested by its contract wins in SA and WA and its maintenance of the North Queensland and Tasmanian contracts.

Lion disputes any suggestion it has undercut rivals to win the new contracts, claiming it will only supply milk where it is adding value.

Extracted in full from The Australian.