Dairy Crest has retained its contract, which will run into 2017, to supply the retail giant.
The firm said that while the conditions of the contract will change from next year, continuing cost reductions were expected to mitigate any financial impact on its business.
Competitively priced milk
Dairy Crest chief executive Mark Allen said: “We are delighted to have retained our Sainsbury’s business. Our track record of making efficiencies allows us to supply our customers with competitively priced milk, pay our farmers a fair price and move towards our medium-term target of 3% return on sales in our dairies business.”
The firm’s last financial statement of February 7 confirmed it was on track to exceed its annual cost savings target by delivering savings of about £23M for the year ending March 31 2013.