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 announcement was made by co-op chief executive Miles Hurrell, who is in Malaysia on a New Zealand business delegation led by Prime Minister Christopher Luxon.
The new UHT cream plant will help meet growing demand through its Foodservice business. Fonterra has a thriving Foodservice business in Asia where demand is growing by integrating dairy into traditional foods such as laksa and milk tea. In Malaysia, Fonterra is looking to build on solid foundations where half of New Zealand exports to the country are already dairy.
Hurrell says the investment is part of the Co-operative’s strategy to grow further value by expanding its Foodservice business in Asia and increasing production capacity for high-value products.
“Demand for UHT cream continues to strengthen. Globally, we’re expecting demand to increase by more than 4% year on year between 2023 – 2032,” he says.
“This is the second announcement we’ve made in as many weeks about expansions at our sites to cater for growing demand.
“We believe prioritising our Ingredients and Foodservice channels will create more value for Fonterra and this expansion is a good example of the direction the Co-op is heading,” says Hurrell.
The new plant will initially create upward of 50 million litres of UHT processing capacity with the capacity to grow beyond 100 million litres by 2030.
Fonterra chief operating officer Anna Palairet says the Edendale site is well set up for future growth with decarbonisation work well underway along with a good supply of high-quality cream in the region.
“The additional processing capacity will allow us to manufacture more UHT cream products and grow value for farmers.”
And she adds, the investment is also good news for the South Island economy.
“Adding to the six new roles created through the recently announced expansion at our Studholme site, we will create an additional 70 new jobs with this new plant at Edendale. This is great news for the local community.”
Additional employment opportunities will also be created through the construction phase, which is scheduled to start early next year. The first product is expected to come off the line in August 2026.
Fonterra’s Edendale site:
- Established in 1881, the Edendale site is New Zealand’s oldest dairy processing site. It was the first site in New Zealand to export refrigerated cheddar cheese and butter to markets around the world.
- It currently employs more than 670 people. The expansion will increase this to around 740.
- Currently it has 10 plants and processes up to 15 million litres of milk per day.
