On Thursday, the company announced the start of a three-year transition phase to relocate to its larger and newer Berkeley Vale factory.

Throughout the first phase of the transition the Cooranbong site will continue production, with no immediate changes to employment expected in the first year.

General manager Todd Saunders said employees would be offered transfers to other Sanitarium sites.

There will be about 20 positions available at Berkeley Vale, but Cooranbong employees will also have the opportunity to fill any vacancies that open up in other parts of the company in the meantime.

"We wanted to give our people a three-year window of visibility so that they can either transfer to the Berkeley Vale site, or have time to retrain and transition into other employment," Mr Saunders said.

"If we are unable to relocate staff they will be assured of their full entitlements."

Lake Macquarie mayor Jodie Harrison said Sanitarium had been an iconic employer in Lake Macquarie for more than a century.

She said she was saddened by the announcement.

"The current manufacturing facility at Cooranbong, built in 1937, is located on the site of Sanitarium's original factory, which dates back to 1899," Cr Harrison said.

"Today it is one of the largest employers on the western side of the lake and its closure will no doubt have a profound impact on the families of the 185 staff who will be made redundant over the next three years."

Cr Harrison said Lake Macquarie City Council would be working with the company to identify new employment opportunities in the south-west of the city to replace the jobs lost.