Murray Goulburn boss Gary Helou.IT’S been eight months since Murray Goulburn began supplying Coles with its private-label milk in Victoria and NSW, under a 10-year deal lauded by the dairy co-op’s boss Gary Helou and launched by Prime Minister Tony Abbott.

According to Murray Goulburn, a big upside of the Coles deal was that it would “drive significant growth in sales for [its] core Devondale milk and cheese brands in the years ahead”.

Sadly for Helou, those years must still be ahead of him. The newest sales data by market researcher Aztec shows Devondale products are absolutely tanking in Coles supermarkets across both states. (Let’s hope it had nothing to do with their xenophobic TV commercials.)

In the three months ending January 25, Devondale commanded just a 2.4 per cent share of white milk sales in NSW, and 2 per cent in Victoria – despite heavy promotion.

With comparable shelf space, Lion’s Dairy Farmers milk is outselling Devondale in NSW by six to one, while Parmalat’s Pauls is outselling it 2.5 to one (in a traditionally weak state for the Franco-Italian processor).

In Victoria, Warrnambool Cheese and Butter’s Great Ocean Road milk is outselling Devondale two to one.

In flavoured milk, Devondale crashed by a catastrophic 58 per cent, leading the segment to a 17.8 per cent decline in the last quarter (driven particularly by Woolworths’ aggressive discounting).

If these (non) sales persist, the Devondale Smoothies product line will almost certainly be deleted. Surprised? UHT milk with fruit juice – yum!

Devondale cheese sales (which as a result of Gary the Great’s triumphant deal returned to Coles shelves in 2013 after a nine-year absence) are down 10 per cent year-on-year, despite 72 per cent of it being sold on special (compared with 15 per cent for Coon and 57 per cent for Bega).

When Helou locked Murray Goulburn into a decade of skinny margins supplying Coles with its $1 milk, his rationale was that it would lead to growth in his branded products and thus higher margins for his farmers.

But the growth has not transpired, which means the margins are on borrowed time – especially as Helou juggles significant debt covenants, tries to raise $500 million in new capital and wears major cost blowouts getting his new processing facilities online.

So if you spot the beleaguered boss at your local diner having a strawberry shake, you might want to forgive his milk moustache and pass him the hip flask.

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