Supermarket giant Coles is moving to a 100 percent Australian housebrand cheese for its stores.

As part of its “Australian First” sourcing initiative, Coles has awarded its entire housebrand cheese business to iconic Australian dairy processor, Bega Cheese Limited.

The new five year contract means that the 50 per cent of Coles brand cheese currently sourced from New Zealand, over 9,000 tonnes, will now be produced in Australia each year. It also means Bega Cheese will be sourcing an extra 70 million litres of Australian milk – or 3500 milk tanker loads.

Coles Merchandise Director John Durkan said Coles wanted to enter a partnership that saw all its Coles brand cheese made in Australia.

“Coles was very keen to partner with an Australian dairy industry processor who could produce all of our cheese locally, and not rely on imported product,” Mr Durkan said.

Bega Cheese CEO Aidan Coleman said that the contract would inject an extra $30 million directly into the Australian dairy industry.

“This new contract with Coles means we will be sourcing additional milk from our 400 dairy farmers across New South Wales and Victoria,” Mr Coleman said.

“We’ll also approach up to 70 farmers who don’t currently supply Bega and invite them to become part of our milk network.

The Coles contract is also said to generate added investment and jobs in the dairy industry.

“Bega plans to upgrade their Coburg plant in Melbourne to meet the contract requirements, which will also create 30 new roles across the company.”

Bega will begin producing Coles brand cheese from February 2012.