What Would Synlait Be Worth to Fonterra or a2 Milk?
Speculation of a possible joint move by Fonterra and a2 Milk to buy Synlait raises a much bigger strategic question, says agribusiness expert Dr Nic Lees.
The new line is part of a project to bolster the site's cheese capability, doubling the amount of the world-renowned sliced cheese that can be produced at the Taranaki-based site.
Director New Zealand manufacturing, Mark Leslie says Fonterra is constantly looking at trends in key markets and working with customers to help meet their growth with investment.
"One of the most exciting things about our consumer and foodservice expansions is they're almost entirely demand-led, meaning from the moment the first product comes off the line it's already earmarked for customers in one of more than 100 markets around the world," he says.
Leslie says these expansions also diversify the co-op's asset mix, giving Fonterra more choices in what it does with farmers' milk and allowing more agility in meeting changes in customer demand.
Sliced cheese made at Eltham comprises both individually wrapped slices and slice-on-slice cheese that is used in restaurants and fast food outlets. Sliced cheese is one of the co-op's most in-demand consumer and foodservice products.
"It's a product that really supports our V3 strategy, to deliver a greater volume of high value products, at velocity," says Leslie.
"Once completed, we'll be able to make around 2.3 billion slices of cheese each year out of Eltham, all of it sold into growth markets in Australasia, Asia and the Middle East."
Site manager Brendon Birss says the team is excited to reach such an important milestone in the project.
"A lot of work has gone into completing the first phase of the expansion. Local builders and contractors have pulled out all the stops to get us up and running on schedule, and we've seen great results from the new lines in testing over the last few weeks," says Birss.
The second stage of the expansion is due for completion in February next year with the new sliced cheese line closing out the project.
"Our teams are now completely focused on the next few months, delivering against our timeline to bring the slice-on-slice lines on board with as little impact to our existing processing as possible," he says.
