Longslow said it had been forced to close the dairy after operating the facility at a loss for two years and recently losing a supply contract with the Spar retail group to Dairy Farmers of Britain.
More than 100 workers will lose their jobs, with some expected to be transferred.
The company said in a statement that moves by retailers to use fewer suppliers meant there was no place for Longslow, highlighting the consolidation and rationalisation trend that is currently gripping the UK dairy sector.
Britain's top dairy processors Arla, Dairy Crest and Robert Wiseman have all predicted a fall in profits this year due to cost pressures and supply contract re-shuffles.
Spar has chosen Dairy Farmers of Britain as its sole milk supplier, following an earlier decision by Asda to use Arla Foods UK as its sole milk supplier.
The shift in contract arrangements will undoubtedly cause heartache for some in the sector, but Britain's National Farmers Union said the schemes may be a good way of raising farmgate milk prices in the long-term for those that remain.
The NFU said in its Dairy Vision report that exclusive supply pools may be able to develop better relationships with their retailer customers. Britain has the lowest average farmgate milk price in the EU.