Fonterra Expands Butter Production by 50,000 Metric Tonnes

Fonterra has announced plans to significantly increase butter production at its Clandeboye facility in South Canterbury, raising capacity by up to 50,000 metric tonnes annually. This move aligns with the company’s strategic shift as it prepares for a shareholder vote next week regarding its $4.22 billion sale of Mainland Group to French dairy giant Lactalis.

According to Fonterra Chief Executive Miles Hurrell, the investment is part of a broader strategy aimed at enhancing earnings back to levels seen in the fiscal year 2025 by 2028, contingent on the successful divestment of the Mainland Group. “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.

Investment and Job Creation

Fonterra plans to invest up to $1 billion over the next three to four years to drive further value in its operations. The expansion at Clandeboye is expected to enhance the facility’s capability to produce various butter formats tailored for global ingredients customers and professional kitchens. The new production line will also ensure compliance with diverse certification requirements, including Halal and Kosher standards.

The demand for butter has surged recently, contributing to increased prices globally, including in New Zealand. “Demand for butter continues to grow,” Hurrell noted, underscoring the strategic importance of this investment for the co-operative.

Fonterra’s Chief Operating Officer Anna Palairet confirmed that the expansion would create 16 new jobs at the Clandeboye site. Construction is slated to commence in December 2025, with the first products expected to roll off the new production line by April 2027.

Earlier this year, Fonterra also invested $64 million to convert two coal boilers at Clandeboye to wood pellet fuel, reflecting its commitment to sustainability and operational efficiency. This latest expansion not only aims to meet growing market demand but also enhances Fonterra’s competitive edge in the global dairy industry.