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 follows on the heels of two major expansion projects announced by the co-op in recent weeks - $75m at Studholme to create a hub for high value proteins and a new $150m UHT plant at Edendale.
The Whareroa cool store investment will boost storage capacity for cheese by around 5,000 tonnes.
Fonterra chief executive Miles Hurrell says these investments are about creating value at every point of the value chain for the co-operative.
“Over the past few weeks, Fonterra has announced significant strategic investments to expand and upgrade its operations. Our strong balance sheet is enabling us to invest for future growth and support ongoing delivery of our strategy,” says Hurrell.
“These investments enable us to keep growing our Ingredients and Foodservice businesses as we look to prioritise these channels to create more value for the co-op.”
The new cool store will be the size of three rugby fields (19,000 m2) and store around 26,000 tonnes of cheese.
Fonterra chief operating officer Anna Palairet says these are big investments, which will have a significant impact on the co-op.
“As is always the case when making investment decisions, we carefully consider where to allocate capital to maximise value to farmer shareholders and unit holders over the long-term.”
The new cool store is strategically important, says Palairet, as it will play a crucial role in the resilence of the co-operative’s supply chain.
“Our Whareroa site processes up to 12.5 million litres of milk per day and produces 30% of the co-op’s cheese, along with a number of other products including butter, casein, and powders.
“The Taranaki region is dairy heartland and I’m delighted we’re able to make this significant investment into shoring up our operations at this site, which is one of the largest in our network,” says Palairet.
Construction on the new cool store will begin next month and will take place over two phases to enable the existing building to remain operational.
The expansion is expected to create local employment opportunities and is forecast to take three years to complete.
About Whareroa site
- Established in 1972
- Processes up to 12.5 million litres of milk per day and produces a fifth of Fonterra’s New Zealand production
- Employs more than 1,000 people
- Has 11 plants and produces Mozzarella, dry salt cheese, butter, whole milk powder, skim milk powder, milk protein concentrate, butter milk powder, anhydrous milk fat, whey protein concentrate, whey protein isolate and lactic casein.
