Food and dairy group, Glanbia has lost part of a contract to supply own-label milk to grocery giant Tesco.

The Kilkenny-based group, the country’s biggest dairy processor, has a deal to supply milk to Tesco that the supermarket then sells under its own label.

Glanbia has lost some of that business with the supermarket chain. Tesco said yesterday that following a review, it now uses the Kilkenny group, along with Tipperary-based Arrabawn and northwestern co-op Aurivo.

"In addition Glanbia continue to supply the popular Avonmore brand to Tesco customers and Glanbia have retained 100 per cent of our own-brand cream and butter business," the supermarket group said.

“As a result Tesco now sources dairy products from farms right across the country and continues to be the single biggest buyer of Irish food and drink in the world.”

Glanbia refused to comment on its deal with Tesco or any other customer yesterday.

“Glanbia Consumer Products is the leading supplier of branded consumer dairy products to the Irish market,” it said.

While the group’s Avonmore milk, dairy and convenience products are well known to most Irish consumers, it also has has a multinational ingredients and specialists foods business.

Last month it reported that it earned €311 million on the back of €3.6 billion in sales. Its sports nutrition products were among its most profitable lines.