Bega Group’s $50M Investment to Consolidate Cheese Operations by 2026
Bega Group is consolidating its Strathmerton cheese operations into its Ridge Street site by mid-2026, targeting significant cost savings and operational efficiencies.
- Strathmerton site to close by mid-2026, operations move to Ridge Street
- $30 million annual cost savings expected post-consolidation
- $50 million capital investment planned at Ridge Street facility
- Non-cash impairment and one-off redundancy costs estimated at $30-$40 million each
- Anticipated 2 cents per share earnings improvement and creation of 100 jobs in Bega Valley
Strategic Consolidation for Efficiency
Bega Cheese Limited, trading as Bega Group (ASX: BGA), has announced a significant operational shift, consolidating its Strathmerton cheese processing and packaging operations into its existing Ridge Street site in Bega. This move, expected to complete by mid-2026, is part of a broader strategy to streamline the company’s footprint and enhance productivity.
Financial Implications and Investments
The consolidation is projected to deliver $30 million in annual cost savings by eliminating duplicated functions and reducing fixed costs. To accommodate the combined operations, Bega Group plans a $50 million capital investment at Ridge Street, funded through its regular capital expenditure program. However, the transition will incur a non-cash impairment charge estimated between $30 million and $40 million related to Strathmerton’s assets, alongside one-off cash costs of a similar magnitude, primarily due to redundancies.
Workforce and Community Impact
Approximately 300 employees at Strathmerton will be affected by the closure, with the company committing to a phased transition and support measures, including redeployment opportunities where possible. Despite the job losses at Strathmerton, the investment in Ridge Street is expected to create around 100 new jobs in the Bega Valley, reinforcing the company’s commitment to its home region.
Maintaining Market Confidence
Bega Group reassures customers that product quality and supply will remain consistent throughout the transition. The company also highlights its continued strong presence in Victoria, retaining five manufacturing sites and employing over 1,700 people across the state. CEO Pete Findlay emphasised the importance of modernising infrastructure to maintain global competitiveness while managing the human impact with care and respect.
Looking Ahead
With the consolidation expected to improve earnings per share by 2 cents after full implementation, Bega Group is positioning itself for a leaner, more efficient future. The success of this transition will be closely watched by investors, particularly regarding the realisation of cost savings and the integration of operations.
Bottom Line?
Bega’s consolidation signals a bold step towards operational efficiency, but the true test lies in execution and workforce transition.
Questions in the middle?
- How smoothly will the integration of Strathmerton operations into Ridge Street proceed?
- What are the long-term impacts on employee morale and community relations in Strathmerton?
- Will the anticipated cost savings and EPS improvements materialise as planned?
