Dairy giant Fonterra has entered into a “mutually beneficial” agreement that will see it process dairy ingredients in the Netherlands for the first time.
The New Zealand-based dairy exporter and Dutch premium cheese producer, A-ware Food Group, have signed a memorandum of understanding, which could see the construction of a new plant to produce cheese and daiy by-product-based nutrtional ingredients.
The brand new facility, which will essentially be “two plants in one”, will house separate cheese and dairy ingredient production lines.
Under the agreement, Netherlands-based A-ware will operate cheese production at the plant, while Fonterra will seperately produce nutritional ingredients using whey and lactose by-products from A-ware's cheese lines.
A Fonterra spokesperson told DairyReporter.com that the memorandum of understanding signifies the first step towards a “partnership of convenience” for both firms.
Partnership of convenience
“Whey is a by-product of cheese production, and would usually be sold on to other companies," said the spokesperson. "But through this partnership, we will be right next door and we will take on A-ware's whey.”
“Through the partnership we will bring together two skills sets. It’s a partnership of convenience.”
“A-Ware is very experienced in cheese making and has a solid base in the Netherlands and we will bring our expertise in the production of nutritional whey, functional whey and lactose products to the table.”
“We have a head office in Amsterdam, but this is the first time we have set up a plant in the Netherlands,” the spokesperson said.
The agreement falls in line with Fonterra’s recent Strategy Refresh, which includes a bigger focus on developing advanced nutritional products for vulnerable and ageing populations, as well as increasing its presence in emerging Asian market.
“Long term demand for dairy is increasing. Asian economies, in particular, are going through huge growth, with massive demand for whey products,” the spokesperson added.
Full due diligence
The firms will now begin a review of the proposal – entering a period of full due diligence – with a view to completing the transaction later this year.
Fonterra was unable to confirm how much the plant development will cost, when construction could start or when operations could begin.
A-ware Food Group CEO Jan Anker added that through the agreement, the firm hopes to expand its service offering in Europe.
“We are now set to take the next step in the manufacturing of cheese. This will help us to expand our service offering with increased flexibility for our growing customer base in Europe,” said Anker.