New Zealand’s Fonterra is poised to invest NZ$150 million (approximately $92.8 million) in establishing a new ultra-heat-treated (UHT) cream plant at its Edendale site, located in Southland. This strategic move aims to address the increasing demand for products within its foodservice sector, particularly in Asia.
Initially, the new cream facility will have the capability to process more than 50 million liters of UHT cream, with the potential to expand processing capacity beyond 100 million liters by 2030. Fonterra’s Chief Operating Officer, Anna Palairet, highlighted that the plant is expected to generate an additional 70 jobs upon its completion. Moreover, the construction phase is projected to create further employment opportunities, slated to commence early next year, with initial production anticipated to begin by August 2026.
Fonterra’s Chief Executive, Miles Hurrell, stated, “Demand for UHT cream continues to strengthen. Globally, we’re expecting demand to increase by more than 4% year-on-year between 2023 and 2032.” This facility represents another recent expansion effort by the company, reflecting its commitment to prioritize its ingredients and foodservice channels. Hurrell emphasized, “We believe prioritizing our ingredients and foodservice channels will create more value for Fonterra, and this expansion is a good example of the direction the co-op is heading.”
Founded in 1881, the Edendale site is noteworthy as New Zealand’s oldest dairy processing facility, currently employing over 670 personnel. The site operates ten plants and processes up to 15 million liters of milk each day.
In recent developments, Fonterra raised its forecast for farmgate milk prices due to stronger commodity market performance. It announced a NZ$0.50 increase in the midpoint of its forecast for the farmgate milk price for the 2024/25 season and noted that earnings for the 2024 fiscal year are expected to fall at the top end of the forecast range of 60-70 cents per share.
In May, Fonterra outlined plans to divest its consumer-facing business to better focus on its ingredients sector, which it describes as a “step-change in strategic direction.” Hurrell indicated the transition could take “at least” 12 to 18 months, as the cooperative aims to cultivate further value by emphasizing its role as a B2B dairy nutrition provider.
In line with current trends in the food and beverage industry, this strategic expansion underscores Fonterra’s commitment to meeting evolving consumer demands while reinforcing its position within the competitive landscape of the food and drink business.
