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17 April 2012, 12:24 | Updated: 17 April 2012, 12:41
Around 250 jobs in Cambridgeshire are under threat.
Dairy Crest has announced plans to close its dairy in Fenstanton.
The facility could be shut down by November.
A bottling factory in Aintree, where 220 people work, is also under threat of closure.
It's part of the company's plans to transfer work to factories in Severnside, Chadwell Heath and Foston in Derbyshire.
Dairy Crest, which employs 4,000 people in its dairies business and 6,000 people overall, also announced that its contract to supply liquid milk to Tesco will not be renewed in July.
The company is now in talks with staff about the future.
Mark Allen, Chief Executive of Dairy Crest, said: "The decision to consult on the closure of our Aintree and Fenstanton facilities has not been taken lightly, but we believe that this proposed restructuring of our Dairies business is the right decision for the long-term.
We will do all we can to help employees who may be affected by these proposals.
The proposals we are announcing today are part of a series of actions designed to restore our Dairies business to an acceptable level of profitability over the medium term.
With lower net debts at the year end than we anticipated, the Group has positioned itself well to absorb the cash costs associated with these closures.
The challenges in the liquid milk industry are further underlined by the disappointing loss of the Tesco liquid milk supply contract. However it represents just 3% of our total liquid milk volumes and has not driven the restructuring decisions which we are announcing."
Cambridgeshire Euro MP Richard Howitt has expressed his dismay at the announcement, and said: "The Dairy Crest plant represents important jobs for all in Cambridge, not everyone can work in the local high-tech industries.
Milk consumption remains popular despite the recession, so hard questions should be asked of Dairy Crest.
A consultation over the potential job losses has now begun and I am in contact with the union and workforce to work to bring forward an alternative plan."