Fonterra is closing its Te Roto Drive specialty cheese making factory in Paraparaumu affecting 63 jobs.
The factory will continue to operate until April 2020 when it will officially close.
Fonterra Brands NZ managing director Brett Henshaw said it was tough news to deliver to staff this morning.
"I'm gutted to be doing this but there was no other option.
"We have been sustaining a loss on our specialty cheese business for a number of years and that is projected to be at an even greater loss.
"We need to do some things differently and can't continue to sustain two factories [the other is in Eltham, Taranaki]."
He said the company owned the Eltham site including the building and land, and there was room to expand, but the Paraparaumu site including building and land was leased [since the early 2000s] and there was no room to expand.
"We simply can't afford to keep running two factories with duplicate costs."
Henshaw said 34 new roles would be added at the Eltham site which affected Paraparaumu staff could apply for.
The company was also offering support for affected staff to apply for other roles within Fonterra around the country.
He said the company had a special connection with Kāpiti and it was interested to talk to anyone in the area about "partnering with us to keep a cheese retail outlet here".
"We want to retain some link with the district."
Kāpiti mayor K Gurunathan said the closure was a blow for the district but the local economy was strong and growing, and could absorb the loss.
"Since 1984, Kapiti cheese and ice-cream have become a staple in the fridges of Kiwis up and down New Zealand, and while production is moving on, there is opportunity to leverage this legacy.
"I've spoken to Fonterra about working together to explore options for ensuring Kāpiti continues to benefit from the brand that borrows its name and inspiration from our home.
"We are a small provincial district within the Wellington region, but our economy is in good health and our push to diversify has strengthened our resilience in managing challenges like this that are outside of our control.
"Kapiti's employment growth was 3.2 per cent for the year ending March 2018 compared to growth of 2.6 per cent regionally.
"Our number of new businesses grew 1.3 per cent in the same period compared to the national average of 0.7 per cent.
"More and more businesses and people want to call Kāpiti home and we are benefiting through the likes of the NZ Police Digital Communications Centre establishing a base in Paraparaumu, providing 300 new jobs, and we expect this trend to continue, particularly in professional and technical services and health care.
"We have the available land, we have transport links through rail, road and air, and we have a highly skilled - and growing - workforce.
"With the extension of the expressway north of Ōtaki and the Transmission Gully motorway nearing completion, our connection to the lower North Island and the capital will only improve.
"Yes, Fonterra's exit is a blow for us, but we have never been in a better position to absorb change."