NEW ZEALAND – Fonterra, a New Zealand-based dairy co-operative, is set to expand its factory in Studholme, southern Canterbury, with an investment of US$51 million.
The expansion is set to increase the production of high-value protein ingredients, particularly for the medical and sports nutrition sectors.
The construction work is scheduled to begin in September 2024, with the new production lines expected to be operational by 2026.
The expansion aligns with Fonterra’s strategic shift from consumer-facing and integrated businesses to a stronger focus on its core B2B offerings.
The co-operative’s CEO, Miles Hurrell, highlighted that the demand for value-added ingredients, especially in cheese and protein products, has been a significant driver of Fonterra’s financial success.
The company reported a remarkable increase in its FY23 profit after tax by AU$994 million, bringing it to AU$1,577 million.
Hurrell emphasized the importance of the Studholme expansion in enhancing Fonterra’s ability to produce these high-demand products, which in turn will boost returns to the cooperative’s farmers.
Richard Allen, Fonterra’s President of Global Markets Ingredients, noted the global market’s potential, with the high-protein dairy category projected to grow by nearly USD 10 billion over the next four years at an annualized growth rate of 7%.
The expansion of the Studholme facility is part of Fonterra’s broader strategy to capitalize on this growing demand.
Under its ingredients brand, NZMP, Fonterra offers a range of functional proteins, including thermally stable milk and whey concentrates that can be used in low pH applications and are resilient during processing.
The Studholme site, which Fonterra has operated since 2012, was selected for this expansion due to its relatively new infrastructure, size, and potential for growth.
The factory currently produces various milk powders, including whole milk, buttermilk, and whey protein concentrate powders, all of which are exported globally.
At peak production, the site processes up to 5.4 metric tons of milk powder per hour and stores up to 3,000 metric tons of finished goods on-site.
Fonterra’s expansion comes at a time when the global and Australian markets are increasingly turning towards high-protein products.
In Australia, there is a notable shift from nutrition drinks and meal replacements to protein bars and sports protein powders.
According to Euromonitor International, this trend is particularly strong among older consumers, with supermarkets in the country capturing a growing share of the sports nutrition market.
The Australian government is also promoting higher protein intake among older adults to combat muscle loss, with specific dietary recommendations for men over 70 years of age.
This shift in consumer preferences is reflected in the growing market value of protein bars, which now make up nearly a third of all sports nutrition sales in Australia, reaching AU$300 million.
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