Emmi said it would spend CHF30m (€18.8m) to move production from its Thun plant to an expanded factory in Langnau. The move will begin from 2008.
The decision is another sign that European dairy firms are working harder to be more efficient as support subsidies drop, input costs remain high and competition in the sector increases.
"In view of the complete deregulation of the cheese market, this will secure Emmi's long-term international competitiveness and its leading position in the fondue segment," the firm said, adding it did not expect to cut any jobs in the move to Langnau.
Emmi is the world's number one producer of cheese fondue, a food thought to originate from Switzerland and referenced at least back to the 17th Century.
The group said recently it had reinvigorated its cheese division after a 3.4 per cent dip in sales last year, mainly due to a poor first six months.
The firm has focused more on premium and export markets to combat a slow-down in cheese consumption in Switzerland. International cheese sales increased six per cent in 2005, with exports generating half of the group's fondue and processed cheese sales.
Recent figures from the Swiss Cheese Organisation show that exports of Swiss cheese rose 2.4 per cent last year to 56,940 tonnes, while imports only crept up 0.15 per cent. Fondue exports increased 17 per cent.
The European Commission predicted this year that cheese will be a crucial added value market for European dairy firms, alongside other products such as yoghurt and functional foods.
Dairy firms have increasingly looked to target added value markets in an attempt to raise earnings and insulate against the European Commission's support cuts for dairy commodities.
Emmi posted record sales of nearly €1.3bn for 2005, helped on by the launch of Choco Latte and yoghurt drink Evolus in Portugal and Switzerland, as well as the launch of its first ice cream range.