Increased Chinese demand speeds up $12m Fonterra expansion

New Zealand dairy processor Fonterra has brought forward the expansion of one of its production lines on the back of growing demand from China.

The NZ$12m (€8.27m) build was originally scheduled to be completed by 2018, however Fonterra brought the project forward with work now set for completion in February 2017.

The expansion will add to Fonterra’s production line at the Waitoa UHT (Ultra-High-Temperature) processing facility on the northern island of New Zealand.

Due to the expansion, another 40m cartons of whipping cream will be produced at Fonterra’s Waitoa facility every year.

Plans to accelerate the supply to China of UHT products is exciting for the business, given new builds in the foodservice space are typically demand-led, the Fonterra Director of Global Foodservice Grant Watson said.

For foodservice products we build capacity based on secured customer orders.

“The fact we have needed to bring the project forward is a good sign of dairys growing popularity in China and points to the strength of our teams in market who are identifying that demand and converting it into sales.”

Recent annual results from the dairy processor showed total sales in its foodservice portfolio have increased exponentially, currently growing at a rate of 15% on last year.

Fonterra Chief Operating Officer in Global Operations, Robert Spurway, said the new line will be up and running by March next year and will bring the site’s total UHT capacity up to 112,000 packs per hour.

“This new line enables us to expand our operations to send more of our farmers milk to higher value products and keeps us on track to meet our ambition of foodservice becoming a $5 billion business by 2023.

The new line will be at full capacity by April next year while a total of 14 full time jobs will be created at the site.