Fonterra has announced a $75 million investment to expand butter production at its Clandeboye site in South Canterbury, New Zealand.

The investment will enable construction of a new butter line at Clandeboye, expanding the site’s current butter production capacity by up to 50,000mt per annum, Fonterra said.

The new butter line will "expand the co-operative's capacity to produce a range of butter formats, tailored for both global ingredients customers and professional kitchens".

'Further value'

CEO Miles Hurrell said the co-operative plans to invest up to $1 billion over the next three to four years in projects that will "generate further value for farmers and drive operational cost efficiencies".

“We’ve said that through focused execution of strategy we are targeting our earnings to be back at fiscal year 2025 levels by fiscal year 2028 if the Mainland Group business is divested," Hurrell said.

“This investment supports that goal by increasing our production of a high-value product and improving our product mix by adding value to milkfat."

Hurrell said global demand for butter continues to grow, and this investment "positions Fonterra to better serve customers worldwide".

Fonterra chief operating officer Anna Palairet said the expansion of the Clandeboye site "strengthens Fonterra’s network in the South Island by improving flexibility and resilience".

“This investment is part of Fonterra’s broader strategic asset roadmap supporting long-term growth in high-value dairy categories," Palairet said.

"The expansion will create 16 new jobs at the site, supporting the local economy."

Construction at the Clandeboye site starts in December 2025, with commissioning scheduled for early 2027 and first product expected off the line in April 2027.

Ingredients business

This is Fonterra’s third investment in the South Island in the past year, following a $75 million investment in an advanced protein hub at Studholme to be sold through its ingredients business, catering to the fast-growing high protein market for medical and sports nutrition.

Construction is expected to be complete in early 2026. 

Fonterra has also invested $150 million in a new UHT cream plant at Edendale.

Construction is expected to be complete in the second half of 2026.

The unsalted butter produced at the Clandeboye site will be used for both ingredients and foodservice customers.

Unsalted butter is a popular choice in products such as croissants, danishes, bread, cakes and cookies, and is increasingly used in traditional Chinese pastries.

Fonterra sells unsalted butter direct to customers under its ingredients brand, NZMP, and foodservice brand, Anchor Food Professionals.