The company’s dairy processing plant, located in Tokoroa in the Waikato region and supplied directly by local dairy farmers, was completed in August and produces dairy commodities such as whole milk powders for use in dessert, bakery, beverage and confectionery applications.
The next stage of the plant’s expansion will see ofi add capabilities to produce specialist ingredients, specifically protein concentrates, to broaden its active and sports nutrition offerings. The company isn’t looking to branch into the production of bioactive components such as MFGM, highlighting that its focus remains on delivering solutions for the food and beverage industry.
“Our next stage of investment will involve enhancing our spray dryer’s capability to produce a broader range of high value protein ingredients, as well as whole milk powder, so that our New Zealand farming partners can benefit from higher returns in time,” Sandeep Jain managing director and CEO, Dairy, at ofi, told DairyReporter.
“Protein concentrates are typically used in sports and adult nutrition and a range of food and beverage applications, such as high-protein beverages and energy snack bars. Demand for these ingredients is growing and our customers’ response to this new opportunity to secure specialised ingredients from New Zealand’s high quality milk pool has been very positive.”
The appeal of grass-fed dairy
Prior to building its own dairy plant in the country, ofi was an investor in New Zealand dairy for 10 years through processor and ingredients manufacturer Open Country Dairy Limited. ofi’s Sandeep Jain told us that New Zealand had always been ‘an important origin’ for sourcing dairy commodities, but the company’s expansion there forms part of a bigger supply and demand picture.
“Tokoroa is connected and an integral part of our wider global dairy processing and innovation network, which features a processing plant and the recently expanded Dairy Ingredient Excellence Centre in Malaysia,” said Jain. “Through working in close collaboration with our Singapore Customer Solutions Center and integrated across our global network of 15 innovation centers, our new Tokoroa plant enables ofi to better collaborate with brands, grocery retailers and foodservice companies to create their next delicious and nutritious product for consumers.
“In addition, ofi’s wider portfolio of products – cocoa, coffee, nuts and spices – enable our customer offering to be laser-focused on exciting innovation-led ingredients and solutions.”
The plant will support the development and co-creation of new food and beverage products whilst meeting regional needs and taste preferences, he added.
“New Zealand is renowned for producing some of the world’s best grass-fed dairy products, and the customer-demand for ingredients from New Zealand is growing.”
“We work with large multinational, local and regional customers who require a broad range of ingredients. New Zealand is an important part of our global supply chain and we look forward to exploring further growth opportunities,” Jain said.
On milk supply, the CEO for Dairy at ofi explained that the company has formed relationships with local farmers to supply the facility. “Our farmers partners live within 100kms of the new plant,” he told us. “We have developed close partnerships with local farmers and the response to our offer has been very positive.
“One of the first things we did was hold focus groups with farmers to listen to what they wanted and needed from a milk supply partner. Their feedback and ideas helped us develop a tailored partnership agreement that meets their needs. It has received an enthusiastic response, and we continue to work closely with farmers as we plan the second stage of plant expansion and investment.”
Farmers interested in finding out more about becoming an ofi milk supply partner can email firstname.lastname@example.org for more information.
Asked if the company would be looking to disrupt the APAC powder market, which is dominated by players such as Fonterra, Nestlé and Yili, Jain insisted that ofi would look to differentiate through supply chain visibility and control. “We take pride in our ability to work closely with New Zealand farmers to ensure traceability across the entire supply chain, from paddock to plate. This allows us to add value for our customers, which ultimately will deliver higher returns for our farmers in time. We believe this is part of what sets us apart in the whole milk powder and specialist dairy ingredients market.”
‘Robust demand for dairy’
Asked if the jitters from the Chinese infant nutrition market - where low birth rates and regulatory barriers have prompted some major players including Nestlé to re-think their milk powder and infant nutrition strategies – could affect ofi’s growth outlook in the region, Jain said that demand for dairy in APAC remains strong.
“We still see robust demand for dairy in the region to compensate for some reduction in demand from China. In the long run, we feel dairy will continue to be an important part of the diet for Asian customers.
"Dairy per capita consumption in the region is still low and we see enough opportunities of growth in the foreseeable future.”
“Infant formula demand is plateauing but is slowly being replaced by much higher demand for adult nutrition which will continue to fuel dairy demand,” he concluded.
On trends and formulation opportunities, Jain highlighted two major areas – sustainability-focused products, and functional and enhanced dairy.
“Consumers are increasingly aware of the environmental impact of dairy production,” he said. “This trend will likely lead to a higher demand for dairy products from sources that prioritize sustainability, such as those employing regenerative farming practices, lower carbon footprints, or more ethical animal treatment.”
Meanwhile, “There's growing interest in dairy products that offer additional health benefits, such as probiotics, added vitamins, and minerals, or lactose-free options,” he stated. “This trend caters to health-conscious consumers looking for products that not only fulfil basic nutritional needs but also contribute to their overall well-being and cater to specific dietary requirements.”