The investment has been allocated to finance the installation of two new production lines at the Leongatha, Victoria-based plant. According to the company – Australia’s largest dairy processor – the plant’s annual UHT milk output will increase by approximately 70m litres as a result of the expansion.
Murray Goulburn managing director, Gary Helou, has claimed that the investment will boost the company’s ability to meet increasing export demand for UHT milk – particularly from Asia.
“The demand for Australian dairy products is growing rapidly. To meet the demand for UHT milk, we realised we had to make the upgrade at Leongatha now,” said Helou.
“The Leongatha upgrade will help MG meet immediate demand for UHT milk from world markets, particularly Asia, while the long-term strategy is confirmed.”
Work at the plant is expected to begin later this month, the company confirmed. It is scheduled for completion by December 2013.
Improved ability to “supply growth markets”
The A$19.1m UHT milk investment signals the start of Murray Goulburn’s August 2012-announced A$200m ($208m, €161m) manufacturing capability expansion.
In a letter to shareholders and suppliers in August last year, Murray Goulburn revealed plans to spend around A$200m over a period of next three years to expand and update its UHT milk, cheese, and butter and spreads manufacturing capabilities.
The company said at the time that this three-year investment programme would better equip it to compete in Australia and at an international level in Asia and the Middle East.
Commenting on the UHT milk investment, Helou said that Murray Goulburn had decided to prioritise its UHT milk as the business is currently running at capacity.
“It will increase our ability to supply growth markets and improve our productivity,” he said.
He added that the upgrade will also provide “new opportunities” for employees, and help the company increase supplier shareholder returns.
“Commitment” to Chinese dairy market
As well as increasing its manufacturing capabilities in Australia to meet export demand, Murray Goulburn recently re-confirmed its “commitment to the fast growing Chinese market.”
In March 2013, the company announced that it had increased its share in Murray Goulburn Qingdao – a China-based infant formula joint venture – from 51% to 100%. The joint venture, which was established in 2007, represents Murray Goulburn’s first manufacturing facility outside of Australia.
In a letter to shareholders and suppliers, the company attributed its decision to “continued strong demand for dairy foods in China.”
“This move confirms our commitment to the fast growing Chinese market, where we believe there is enormous potential for growth in the dairy food and nutrition categories and this is best achieved though 100% ownership of the business,” said the letter.