South Caernarfon Creameries, which employs 110 workers, will begin supplying Staffordshire-based Adams Foods Limited – the Pilgrims Choice brand-holder - from January.
Adams Foods is a major retail and foodservice provider.
South Caernarfon Creameries new facility will be based on the firm’s existing Chwilog site and will be completed by 2016.
The development comes on the back of the businesses ending liquid milk processing at the site in a move which cost 10 jobs.
Creameries managing director Alan Wyn Jones said it was a tough decision to end liquid milk processing, but added it was a very small part of the business.
The company will continue to sell liquid milk under its Dragon brand, but the milk will be distributed by Cotteswold Dairy in Tewkesbury, Gloucestershire.
The contract with Adams Foods will run for three years and begin early in the new year.