Fonterra plans to invest $75 million to increase butter production as it seeks to boost earnings following the sale of its global consumer business.
The investment at Fonterra’s Clandeboye plant in South Canterbury is expected to boost the butter production capacity at the site by as much as 50,000 metric tonnes annually.
The announcement precedes next week’s vote by farmer shareholders on the $4.22 billion agreement to sell Mainland Group to Lactalis, as Fonterra shifts its focus toward its ingredients and foodservice operations.
“We’ve said that through focused execution of strategy, we are targeting our earnings to be back at FY25 levels by FY28 if the Mainland Group business is divested,” Fonterra chief executive Miles Hurrell said.
“This investment supports that goal by increasing our production of a high-value product and improving our product mix by adding value to milkfat.”
Fonterra has outlined plans to invest up to $1 billion over the next three to four years aimed at generating additional value and improving operational efficiencies.
It said the new butter production line at its Clandeboye plant would enhance its capability to manufacture various butter types, catering to global ingredients customers as well as professional kitchens, while also meeting diverse market demands such as Halal and Kosher certifications.
Fonterra chief operating officer Anna Palairet said the expansion would generate 16 new jobs, contributing to the local economy. Construction is scheduled to begin in December 2025, with the first products expected from the new line in April 2027.