Why Fonterra accepted defeat in the dairy aisle
OPINION: Fonterra's sale of its consumer dairy business to Lactalis is a clear sign of the co-operative’s failure to compete in the branded consumer market.
The co-operative says its proteins have enhanced functionality and are designed to perform well in premium product applications such as medical and high-protein sports nutrition.
The global high protein dairy category is projected to grow by close to US$10 billion over the next four years, at an annualised growth rate of 7% per annum.
Fonterra chief executive Miles Hurrell says the investment is part of the co-op's strategy to grow value through its world-leading Ingredients business by partnering with customers who value Fonterra's unique offering.
"We have valuable expertise in dairy science and innovation, making us leaders in the manufacture of dairy proteins and other advanced ingredient solutions.
"The expansion of our Studholme site will allow us to increase production of this high-value product and ultimately grow returns to farmers," says Hurrell.
Fonterra president Global Markets Ingredients, Richard Allen, says the co-op's dairy ingredients are highly sought after by customers globally.
"Increasing our manufacturing capacity for functional proteins will enable us to continue to strengthen our offerings with existing customers as well as attract new business."
Site works at Studholme will begin next month with the first product due to come off the line in 2026. In addition to producing advanced proteins, the site will continue to support the South Island's milk processing as it has down since Fonterra acquired the site in 2012.
Allen says the project team reviewed Fonterra's world-wide asset network before deciding on the Studholme site.
"It's pleasing to see we are able to expand an existing site to produce these high value ingredients. The Studholme site was chosen as it is the right size, relatively new and has been built with future expansion in mind. It makes sense economically and we're confident in the longevity of the site to supply these ingredients for the long term," says Allen.
Fonterra expects six new roles at the site will be created as a result of this project and a large number of contractors involved in the build will come from the Canterbury region.
The project will also support the conversion of Studholme's existing coal boiler to a coal-free alternative in line with Fonterra's commitment to exit coal by 2037.
