Fonterra has signed a memorandum of understanding with Netherlands-based A-ware Food Group to set up a new cheese and dairy ingredients factory in the Netherlands later this year.
Under the proposed deal, A-ware would operate a new cheese plant and Fonterra would operate a dairy ingredients factory alongside of this. Whey and lactoses produced onsite will be processed into premium natural ingredients to supply Fonterra customers throughout Europe and Asia.
Fonterra CEO Theo Speirings said the investment fitted with the strategic priorities of both companies. In Fonterra's case, that included a focus on nutrition for the vulnerable and to promote mobility among ageing populations globally.
"We have substantial intellectual property in the manufacture of functional whey protein ingredients and have been looking for some time for a source of high quality whey to enable us to commercialise these innovations for our customers around the world," Spierings said in a statement.
The New Zealand Milk business was producing more milk powder here to boost returns and therefore needed an alternative source of whey to meet growth requirements. The company also needed more lactose for its global ingredient business and the proposed partnership would give greater access to both, Spierings said.
The cost of the investment has not been disclosed at this stage.
A-ware is a significant provider of premium cheese in Europe, and its chief executive Jan Anker said it was ready to take the next step in cheese manufacturing.
"As a family-owned business, we aim to firmly anchor our business in the Dutch dairy industry and look forward to co-operating directly with Dutch dairy farmers in the future."
Due diligence is being carried out on the deal, which both parties hope to settle later this year.
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