Why Fonterra is investing $20 million at its Te Rapa site

Fonterra has announced an investment of almost $20 million at its Te Rapa site to meet growing demand for cream cheese and mini-dish butter.

This growth in demand is further demonstration of a shift in food preferences in China and across wider Asia.

“Much of the demand we’re seeing for products like the mini-dish butter is from hotels, restaurants and commercial kitchens in China — all out-of-home eating experiences where consumers are choosing dairy to complement their meal,” said Robert Spurway, COO Global Operations.

“Where in the past, many of these markets have trended towards non-dairy creams and spreads, we’re seeing a real 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.”

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

A taste trend towards butter is evidenced by the increase of the country’s imports from 17,000 tonnes in 2009 to 63,000 tonnes in 2016, representing an annual growth of around 20%.

The expansion will see Te Rapa go from six cream product lines to eight, incorporating state-of-the-art technology to achieve highest possible output.

The new butter line will see production more than double from 250 million to 650 million 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 5 kg blocks in addition to the 20 kg ones currently produced.

“Recently we’ve seen the demand, particularly out of China, exceed supply,” said Spurway.

“So this expansion is all about responding to the market, investing in building capacity and delivering on our value-add strategy by converting more milk into higher returning products. It will also give us more choices in the products we’re able to make so we can be more responsive to our customers.”