Fonterra Expands Butter Production Amid Major Brand Sale

Fonterra, New Zealand’s leading dairy cooperative, has announced plans to significantly increase butter production at its Clandeboye facility in South Canterbury. This expansion aims to enhance the plant’s capacity by up to 50,000 metric tonnes annually. The announcement coincides with an impending vote among farmer shareholders regarding Fonterra’s $4.22 billion agreement to sell the Mainland Group to French dairy giant Lactalis.

The cooperative is shifting its focus towards its ingredients and foodservice sectors. According to Miles Hurrell, Fonterra’s chief executive, the strategic divestment of the Mainland Group is aimed at restoring the cooperative’s earnings to levels seen in fiscal year 2025 by 2028. “This investment supports that goal by increasing our production of a high-value product and improving our product mix by adding value to milkfat,” Hurrell stated.

Fonterra plans to invest up to $1 billion over the next three to four years to drive further value. The new butter line at Clandeboye will enable production of various butter formats designed to meet the needs of global customers, including professional kitchens. The facility will also accommodate diverse certification requirements, such as Halal and Kosher.

Demand for butter has surged recently, resulting in higher global prices, including in New Zealand. Hurrell noted that the appetite for butter continues to grow, which underscores the rationale behind the expansion.

Fonterra’s chief operating officer, Anna Palairet, added that the expansion would create 16 new jobs at the Clandeboye site. Construction is set to commence in December 2025, with the first products expected to roll off the new production line in April 2027. Earlier in the year, Fonterra invested $64 million at Clandeboye to upgrade two coal boilers to run on wood pellets, reflecting its commitment to sustainability.

This latest investment and expansion illustrate Fonterra’s strategic pivot as it navigates significant changes in its business landscape while aiming to boost its production capabilities in a lucrative market.