Dairy giant Parmalat has raised the stakes in WA's flavoured milk wars by moving into local production at Harvey Fresh.
Parmalat will begin churning out its flavoured milk brand just three months after purchasing Harvey Fresh for $120 million and vowing to boost local milk supply and processing.
Its Oak brand hit the State in October through a distribution deal with local pie maker Mrs Mac's but was criticised by rivals and some farmers for not being made with WA milk.
Harvey Fresh general manager Paul Lorimer said that from this weekend milk from South West farms would be used to produce Oak flavoured milks for the WA market.
"We'd hope over the next 12 months Oak could easily pick up a 10 per cent share of the market, which is in the vicinity of four or five million litres," he said.
Harvey Fresh has not been a big player in a market worth about $57 million a year and dominated by Brownes and Lion through its Masters brand.
Mr Lorimer said Parmalat saw an opportunity to produce its national brands in WA by increasing milk supply and processing at Harvey Fresh. It is also eyeing export growth and had a good response to a recent incentive payment scheme for farmers to step up summer milk production.
Parmalat has been producing flavoured milk for WA from Adelaide since splashing out $600,000 on an advertising blitz which grabbed about 5 per cent of the market share.
Mr Lorimer said Parmalat would continue its arrangement with Mrs Mac's and look to broaden its distribution base.
Brownes managing director Ben Purcell said the move was overdue and that ideally all dairy products sold in WA should be produced from WA milk.
Mr Purcell said the capital unlocked by the $53.5 million sale of Brownes' Balcatta processing and distribution centre to property group Stockland would be used to retire debt and for investment in growth in WA. Brownes sold the property under a 20-year lease-back agreement.