More than 200 jobs are at risk in South Derbyshire after Muller confirmed plans to close their site in Foston.
The dairy producer says operations are likely to cease by the end of the year.
The decision follows a review of the company's dairy network which examined factory utilisation against a backdrop of declining consumption of fresh milk.
The company say it needs to reduce costs in order to build a sustainable business.
Patrick Müller, Chief Executive at Müller Milk & Ingredients said:
"We fully recognise that this decision will be devastating for our employees at Foston, but if we are to have any prospect of building a fresh milk business which is sustainable in the short and longer term, we need to make significant changes to reduce our costs.
"MMI has the best invested network in our industry. But we must adapt quickly to meet the realities of a changing market. Inaction is not an option and would place at risk the future viability of fresh milk, long regarded as a staple of the nation's fridges.
"It is important to stress that the workforce at Foston has handled this review period with the utmost professionalism and diligence. That this site must now cease production is no reflection on the capabilities and dedication of our employees.
"Wherever possible, we will offer our colleagues opportunities to relocate within our network, and we will do everything we possibly can to support those who do not wish to relocate or for whom there are no roles."
The Union of Shop, Distributive and Allied Workers called the closure a "devastating blow" for the "loyal workforce".
Daniel Adams, Usdaw National Officer says: “While Usdaw recognises the ongoing challenges within the dairy sector, this news is a devastating blow for a loyal and hardworking workforce.
“Despite extensive interrogation of the company’s business case by the trade union, including exploring all alternatives to closure during collective consultations at a national level, we were sadly unable to persuade the company to maintain its operation in Foston.
“The union, however, has continued to work tirelessly through the collective consultation process to secure as good a deal as possible for those at risk of redundancy.
"Through the efforts of our local and national reps, we have managed to agree enhanced redundancy terms and additional payments at the point of closure for those made redundant, as well as pay protection and relocation support for those that secure alternative roles within Müller.
“We are also continuing to look at retraining opportunities to be provided and funded by the company as well as utilising the expertise of the Usdaw’s Lifelong Learning Team.
"Our reps and officials are continuing to provide support and advice to our members at this very difficult time.”