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.
Previously planned to come online in 2018, Fonterra brought forward the project to add another production line at the Waikato site, with work on the $12 million build now set for completion in February 2017.
Fonterra director global foodservice Grant Watson says the acceleration of plans to supply China with more UHT is exciting for the business, given new builds in the foodservice space are typically demand-led.
“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 dairy’s growing popularity in China and points to the strength of our teams in market who are identifying that demand and converting it into sales.”
Fonterra’s recent annual results showed total sales in its foodservice portfolio have increased exponentially, currently growing at a rate of 15% on last year.
Fonterra chief operating officer global operations Robert Spurway says 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,” says Spurway.
The new line will be at full capacity by April next year and will create 14 full time jobs at the site.
