Dairy Crest, the leading UK-owned dairy foods company, has announced that it has entered into a partnership with Fonterra, the world’s leading dairy exporter. Fonterra will market and sell two products for the fast growing global infant formula market.
Dairy Crest had previously announced a £45 million investment to manufacture demineralised whey powder. This is the base ingredient in infant formula and will be produced from the whey generated at its cheese making factory at Davidstow in Cornwall. Fonterra will receive a commission to sell all of Dairy Crest’s demineralised whey production and will also provide technical and engineering support. The agreement is for a minimum of five years.
Dairy Crest is also announcing a new £20 million capital investment at its Davidstow site to manufacture galacto-oligosaccharide (GOS). GOS is a lactose-based prebiotic, widely used in infant formula. Dairy Crest will enter into a joint venture to produce GOS with UK-based Fayrefield Foods Limited who will provide access to the necessary enzyme and other intellectual property.
Fonterra will supply lactose and will also take responsibility for marketing and selling this product. This project is anticipated to provide an eight year cash payback for Dairy Crest.
The £45 million capital investment in demineralised whey powder is already well underway and on track, with commercial production expected to begin early in 2015/16. Production of GOS is expected to commence later that year.
Mark Allen, Chief Executive, commented: “Demineralised whey powder and GOS form an important part of Dairy Crest’s strategy to grow added value sales. We are excited to be working with Fonterra and Fayrefield Foods to bring these two innovative new products to market. These partnerships, with leading experts in the field, give us exposure to global growth opportunities.”
Fonterra Chief Executive Theo Spierings said the partnership provided the opportunity for both companies to grow volume and value by pooling their expertise. He continued:
“Dairy Crest possesses proven technical expertise, a quality culture and an excellent source of high-quality whey. We are delighted to have the opportunity to partner with them, and provide our global customers paediatric ingredients made in state-of-the-art facilities by a dairy company that shares our commitment to safe, high-quality dairy nutrition.”
The announcement has been welcomed by UK Government. Owen Paterson, Secretary of State at Defra said:
“It’s great to see an exciting development like this, which adds value, supports local talent and promotes British dairy products both at home and abroad. The global market is where the big opportunities lie – dairy product exports increased by more than 39 per cent since 2009 reaching £1.3bn in 2013. This is a superb achievement and I’m delighted that innovative companies like Dairy Crest are seeking to build on that.”
Further support came from the Chancellor George Osborne following a trip in May to Davidstow: “I recently saw first hand what a successful, dynamic, job-creating firm Dairy Crest is.
“A key part of our long term economic plan is to export more of what the UK makes around the world - and this shows we are doing just that.”