The expansion will increase Fonterra's capacity for UHT whipping cream.
Fonterra has brought forward an expansion to its Waitoa UHT facility in New Zealand, meaning it will install another production line for whipping cream a year earlier than previously expected.
The move has been motivated by ‘growing demand’, Fonterra said, and would allow the company to increase its output of whipping cream by up to 40 million cartons. The expansion to the site was originally expected to go live in 2018, but, with the project now being brought forward, work on the $12 million build is set for completion in February 2017.
The new line will bring the Waitoa site’s total UHT capacity up to 112,000 packs per hour.
Much of the additional output will be used to supply China, where consumer confidence in New Zealand and Australian-made dairy remains far higher than domestic products.
Fonterra director global foodservice Grant Watson said 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,” Watson explained. “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 said: “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.”
The new line will be at full capacity by April next year and will create 14 full time jobs at the site.
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