The spin was pretty hard, but investors haven't bothered hanging around, dumping Bega Cheese, with the shares down a heavy 11.5 per cent at $6.25 on the loss of a large supply contract with Coles.
Bega had a 5-year contract to supply Coles with its house branded cheese, which expires in early 2017. That contract has now been won by the recently listed Murray Goulburn.
With the contract loss, Bega said it will be shifting to focus more on high margin products such as infant formula and "nutritionals".
The reduction in cheese supply to Coles will free up an estimated $60 million of inventories, it said.
Murray Goulburn said it has a 10-year supply deal with Coles, with the cheese portion alone worth $130 million in revenues annually.
The news is spreading to other "dairy darlings", to coin a phrase, with Bellamy's down 6.5 per cent to $12.92, while Blackmores, which recently unveiled its own infant formula line, is down for the sixth straight session, 10.3 per cent lower at $172.
Sticking with Blackmores, the stock has lost 20 per cent this year but, to put that into context, has more than quadrupled over the past 12 months. Goldman Sachs on Friday reaffirmed its "buy" rating and a target price of $228.
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