Chinese demand prompts $20m Fonterra plant investment

By Jim Cornall contact

- Last updated on GMT

Increased demand from China for dairy products has led to Fonterra announcing the expansion of its Te Rapa plant.
Increased demand from China for dairy products has led to Fonterra announcing the expansion of its Te Rapa plant.

Related tags: Milk

Fonterra has announced an investment of almost NZ$20m (US$14.2m) at its Te Rapa site to meet growing demand for cream cheese and mini-dish butter.

Robert Spurway, chief operating officer global operations, said the growth in demand is proof of a shift in food preferences in China and across wider Asia.

Spurway said a lot of the demand for products like mini-dish butter is from hotels, restaurants and commercial kitchens in China.

He added that previously the market trended towards non-dairy creams and spreads, but now there is a desire for natural dairy in both food preparation and at the table.

“And while the foodservice aspects are important, it is the latter that is really exciting – consumers actively choosing to incorporate more dairy into their daily diets,”​ Spurway said.

Butter trend

China is the greatest growth driver for Fonterra’s consumer and foodservice business with a 40% increase in volumes for the financial year to date compared to the same period last year.

The trend towards butter is shown by the increase in China’s imports from 17,000 tonnes in 2009 to 63,000 tonnes in 2016, an annual growth of around 20%.

Spurway said the expansion is a response to the market by investing in building capacity and delivering on the company’s value-add strategy by converting more milk into higher-returning products.

Jump in production

The expansions will see Te Rapa go from six cream product lines to eight, while the new butter line will see production jump from 250m to 650m mini-dishes per year.  

Meanwhile the additional cream cheese line will increase plant capacity from 30,000 tonnes to 33,500 tonnes per year, as well as add capability to manufacture 5kg blocks in addition to the 20kg ones currently produced. 

The Te Rapa Site was established in 1967 as a powder drying facility. The cream plant was established in 1997 for the manufacture of consumer and bulk butter and cream cheese, with an additional cream cheese line added in 2013.

As one of Fonterra's top five manufacturing sites in New Zealand, Te Rapa employs around 500 staff and produces 80,000 tonnes of products per year.  

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