Murray Goulburn's premium chase

Staff were informed of the cuts yesterday, which will slash 13 positions at Kiewa, four at Cobram, 23 at Leongatha, three at Rochester and 11 at Maffra, just days after MG senior management visited its Cobram and Koroit plants to re-announce its $127 million capital investment.

In a letter to suppliers and shareholders, the company stated the job cuts were as a result of changes to its "operational processes and activities".

The latest job cuts take the tally to 427 redundancies, as part of the company's restructure plan they've undergone in the past two years.

During the Koroit plant tour last week, MG managing director Gary Helou said the operation plans to shift the business focus from commodities to sales in higher margin segments.

"In particular, the growth markets of Asia," he said.

"That means connecting manufacturing facility and distribution chain directly to the Asian consumer, giving them what they want – customised food and a range of products that consumers in Asia want," he said.

MG last week announced it would invest $127m in three "value-added" areas, including $74m investment in consumer cheese at the Cobram facility targeting Australian and Asian consumers, $38m in infant nutrition products destined for Asia at Koroit and Cobram, and $14m in Dairy Beverages at Edith Creek, Tasmania – which Mr Helou said promised a "whole platform of growth".

The investment publicity comes as Japanese-owned dairy company Lion announces its intention to cut the number of products to push value-adding products, such as specialty cheese.

Lion's move is aimed at turning around the struggling business that reported billions of dollars of write-downs in dairy and booked a $338.8m impairment in the 2013 financial year, according to Stock & Land.

Dairy Australia commercial research and analysis manager Norman Repacholi said it was an ongoing trend within the retail landscape to chase profitable products because of the pressure to have brands perform.

"Rather than having a wide variety, companies will pick their strongest brands and put more resources behind those so they are effectively trying to maximise their returns by picking winners," he said.

Dairy Australia's latest export summary showed Australia exported 554,249 tonnes from July 2013 to March 2014 – down 8.5 per cent for the same period last year.

"MG, Fonterra, Warrnambool Cheese & Butter have had a tradition of being present in export markets. That share of what Australia has produced for the international market has shrunk as milk production has declined," Mr Repacholi said.

"In 2001, about 60pc of Australian production was exported, but this year we are looking more about 40pc exported."

With the growing trend to chase premium products, Mr Repacholi said it was no surprise companies were increasing their focus on the export market.