Rising costs coupled with consumers cutting their spending led to the 100 job losses at Yeo Valley's Cannington dairy, according to the organic food business.
Graham Keating, director of the firm, which employs 1,300 people in three dairies in the South-West, including 250 at Cannington, said: "Although we saw an increase in sales over the last 12 months of 7%, our raw materials and production costs have rocketed significantly.
"Our organic milk sales continue to grow strongly but within the highly promotion-driven and price-sensitive yoghurt market, we have seen consumers become more cautious with their spending over the last three months and this trend is set to continue into 2009."
As part of the restructuring, the dairy will switch from working around the clock to 12-hour days, said Keating: "We are left with no alternative other than to reduce production in the parts of the company that are most affected by this buying downturn."
The plant, which was acquired by Yeo Valley in 1997, produces big pot yoghurts under the Yeo Valley brand and some own-label lines.
Yeo Valley has now begun a 90-day consultation period with staff at Cannington.