Shares in Robert Wiseman Dairies have plunged more than 18% after the firm said it had lost a contract worth �70m to supply milk to Asda. The supermarket chain told the dairy firm it was to source its milk from a single supplier.
Managing director Robert Wiseman said the decision by Asda was "obviously a major disappointment".
He added that the firm would try to persuade Asda to reverse its decision, but that the chances were slim.
Mr Wiseman added that the firm would try to make up the lost turnover elsewhere.
Earlier this month, the company - which is Scotland's biggest milk firm - reported a 27% rise in annual profits to �28.9m.
One of the reasons for its profits growth was its growing sales to supermarkets, with increasing business coming from Tesco and Netto.
By the close of trade on the London Stock Exchange, Robert Wiseman shares were down 47.5 pence at 236 pence.
Asda announced that all its liquid milk would be met by Arla foods, succeeding the previous agreement with other suppliers such as Robert Wiseman.
The National Farmers' Union Scotland (NFUS) said that it had received a commitment that milk sold in Scottish Asda stores would continue to be sourced north of the border.
NFUS president John Kinnaird said: "There will be implications of this move for the industry as a whole and NFUS will be ensuring that producers' interests are represented during these developments."
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