Tamar Valley Dairy goes under following turbulent times

Yoghurt producer Tamar Valley Dairy has collapsed, with administrators pointing to slower sales and pressure on margins as causes.

The 17-year-old business was established in 1996 near Launceston, Tasmania and has 170 employees.

Deloitte Restructuring Services partners Glen Kanevsky and Tim Norman were appointed administrators, with the first creditors meeting to be held on October 2.

Kanevsky said the business operated in an "extremely competitive sector" and that it had been challenged due to a "slowdown in sales and pressure on margins".

"We are currently examining the trading position of the business and will be working closely with all key stakeholders to allow the business to continue to operate as normal," he said.

Norman said their immediate policy is to "commence an urgent expression of interest process to recapitalise or sell the business".

The company produces a variety of yoghurt products including classic, low fat and Greek varieties. It has been stocked in major retailers including Coles supermarkets, with its own brand and private label offerings.

In April this year the business was reported to have financial challenges, with Tamar Valley Dairy founder Archie Matteo confirming with The Australian that his family company owed creditors and suppliers several million dollars as part of a "short-term liquidity problem".

At the time The Australian reported the company had received an $8 million injection from fellow dairy manufacturer Bulla Dairy Foods, for an immediate stake in the business. Bulla chief executive Reg Weine declined to confirm the report with SmartCompany.

Reports said Tamar Valley Dairy had just finished building a new state-of-the-art yoghurt factory and had recently had a request for $5 million in funding to the Tasmanian government rejected.

In recent years the business struck an agreement with Coles supermarkets to produce its private label yoghurt range. Matteo told coles.com.au that the deal meant the business would focus on hiring and expansion.

"We were approached by Coles to produce their private label product for them and they were prepared to negotiate a price around quality," he told the supermarket's publication.

"Previously, most home brand negotiations were based around price and then they deducted the quality."

Matteo told coles.com.au he was confident that the deal would be a boost for Tamar Valley Dairy.

"We expect that within the next three years our production should increase to about 250 tonne a day and we'd have employed another 60 people," he said.

The news of the collapse comes amid a challenging time for the dairy farm industry, with a number of high-profile Australian dairy farms currently up for sale. Industry figures reveal the number of dairy farms in Australia has fallen by 71% since the 1980s.

Figures compiled by Dairy Australia from the state milk authorities show in 1980 there were 21,994 registered farms in Australia, but in 2012-13 this number had declined to 6398.

Source: Smart Company, 25 September 2013