Bream Creek were supplying to Fonterra as well as distributing fresh milk under their own label, which recently won a Tasmanian Fine Food Award.
Jack Bignell says the contract with Coles will mean the milk is processed at Lenah Valley instead of being trucked to Spreyton to process.
Four small calves in a paddock at a dairy in Bream Creek in southern Tasmania looking at the camera
He says the dairy has also changed the way it handles poddy calves who will now spend more time on farm to grow and fatten for processing.