WA's biggest milk collector, Brownes Dairy, this week announced a multi-million dollar acquisition of Canning Vale-based premium dairy product manufacturer Casa Dairy.
Brownes managing director Ben Purcell said his company had been approached by Casa's owners, who include Vic and Frank Letizia, to buy the business to expand its operations.
"They needed to invest to grow the business and, for us, it is a complementary business that fits nicely with Brownes," he said.
Brownes intends to operate Casa as a stand-alone company and will retain its brand in the retail market.
Casa started in WA in 1981 and has been producing premium quality niche products that include European-style cheeses, yoghurts, creams and buttermilk.
Mr Purcell said Brownes would oversee the upcoming national launch of Casa mascarpone and Quark cheeses in Woolworths supermarkets.
"Casa has been selling these products through Woolworths in WA and is about to open up nationally through the retailer," he said.
"Brownes is better equipped to grow the sales of these volumes appropriately."
Brownes intends to retain Casa's 27 employees.
Mr Purcell said the Casa purchase was the first acquisition for Australian private equity firm Archer Capital in the dairy sector since it bought Brownes Foods and Western Fresh in 2011.
The company was also investing in a new yoghurt packaging line at Brownes' Balcatta manufacturing plant and had installed a new bottling facility for flavoured milk.
Brownes collects about 150 million litres of milk each year from WA dairy producers, making it the biggest player in a market now dominated by three major processors.
All of its dairy products are made from milk produced by WA-run cows and Mr Purcell said one of the company's core growth strategies was in value-added products.
"There is potential for higher value products to get higher returns back to dairy producers and ensure the long-term sustainability of the industry," he said.
"We are doing nothing in our business that is not focused on getting higher returns for us and for our farmer suppliers."
Mr Purcell said the purchase of Casa opened opportunities to sell premium, award-winning products that offered further potential for Brownes to extract a fair price out of the market to return at the farmgate.
"We know we need to get increased prices for milk out of the market and that is a shared responsibility between processors and all of our customers, including big retailers, smaller retailers and coffee shops," he said.
"We recognise that milk prices need to be in advance of where they are now for the average dairy producer to contemplate growth in their business."
WA dairy farmer Phil Depiazzi, who was last week elected president of the WAFarmers dairy section, told Perth Now the Casa acquisition was a good move for farmers, if it meant more milk would be used."We've seen a lot of rationalisation at the farm level and I guess we concede there needs to be some rationalising among processors … as long as the processors are putting (milk) into products that end up making a return to farmers," he said.
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