September 20, 2010

Fonterra bolsters UHT milk capacity on Asian demand

Fonterra has completed an NZD8-million (US$5.8 million) investment in its UHT milk processing facilities in Auckland in a bid to meet growing demand in Asia and the Pacific.

The upgrade and expansion of its Takanini plant has created a 30% increase in production capacity, which translates into the ability to fill an extra 600,000 packs of UHT milk every week.

Fonterra expects global consumption of UHT to increase at a compound annual rate of 5.2% through to 2012. According to the company, this makes it one of the fastest growing niches in the industry and one that presents significant opportunities.

Much of this growth is coming from the Asian market, where Fonterra plans to focus its efforts. Limited domestic supply, growing populations and education about the nutritional benefits of dairy are all feeding demand for Fonterra's products in Asia.

"With this increased production capacity, we will be able to expand our presence in our existing markets of China, Singapore and Hong Kong as well as start exporting into new markets such as Malaysia, Indonesia and Vietnam," said Peter McClure, managing director of Fonterra Brands New Zealand.

The company will also be looking to develop low fat and fortified UHT milks as the demand for these products is emerging in developing markets, he added.

Fonterra began making UHT back in 1981 and had reached an annual production level of 27 million litres in 2005. Last year that figure increased to 60 million litres due to the booming Asian market. With this latest expansion, annual production is set to rise to 90 million litres.