The Saga Group subsidiary's new site at Foxcover Enterprise Park will be capable of distributing up to one million items of direct mail per day.

Managing director Alan Purvis said: "Having reached full capacity at our Peterlee site, we undertook a full review of available property in the UK. However, the thing that came to the fore over and over again was a desire to minimise any impact on our team."

Purvis declined to comment on the specifics of the investment, which is understood to include new sorting, folding and packaging machines in addition to the site.

He added that the company had grown its turnover from £7m to £10.5m in the past few years and that it was targeting an extra £2m by the end of 2011.

The move follows a £5m investment in 10 new Xerox digital print engines, including seven Nuvera 288 mono cut sheet printers, in 2009 and a £3m finishing equipment spend in 2008.