The chairman of the newly acquired Crediton Dairy has said that £2 million is being invested in order to drive up capacity and enable the business to launch new products later this year.
Last week, the European Commission gave approval to the management buyout of Crediton Dairy from Arla Foods with former Milk Link executives Neil Kennedy and Tim Smiddy heading up the new venture.
The undisclosed-value buy-out is being supported by a long-term, asset-backed financing agreement with Lloyds Banking Group.
At present, the dairy is a £70 million business with production capacity of 200 million litres of milk but the new management believes it has significant potential to grow.
Mr Kennedy said it would be looking for more Devon and Somerset farms to recruit as suppliers in order to drive its expansion.
"We're looking to make the business substantially bigger and we will, as we go forwards, be looking to recruit more South West farmers to supply us," he said.
"We consider ourselves open for business and we will be holding a number of open days for farmers to come in and meet us."
Crediton has two main strands of activities – UHT milk and flavoured and fortified milk products which it makes for well-known brands including Mars and Flora.
It is believed that the new products it is currently working on are in the latter area, which offers higher growth levels than its traditional UHT products.
The dairy supplies all the main supermarkets including Tesco, Sainsbury's, Waitrose, Marks & Spencer and Morrisons.
It currently employs 117 people, with the possibility of jobs growth if new products take off. "The acquisition has provided very welcome security to the staff here who have had a period of uncertainty," said Mr Kennedy.
"It could be that, as the business grows, we increase the number of jobs, but for now, we are just getting on with our first day as the new business."
Arla Foods amba sold the dairy, which was formerly owned by Milk Link. Its disposal was a condition imposed by the European Commission, prior to the rubber-stamping of Arla's October takeover of the co-operative.
Milk Link invested around £10 million in the dairy when it consolidated its Devon and Kirkcudbright, Scotland, operations there, in 2010.