Fonterra inks deal with UK firm

NIKO KLOETEN
Last updated 09:27 04/07/2014

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Fonterra has signed a five-year deal to market and sell two infant formula ingredients made by British-based Dairy Crest.

The products, a prebiotic called galacto-oligosaccharide (GOS) and demineralised whey, are both used in the manufacture of infant formulas.

Fonterra will be the exclusive sales channel for the infant formula ingredients produced and will receive a commission on the sales.

Dairy Crest is entering into a newly-formed joint venture with British-based Fayrefield Foods to produce the GOS. These factories are expected to begin production next year.

Fonterra chief executive Theo Spierings said the agreement was a win-win for all the companies and each would bring their expertise to the partnership.

He said the deal aligned with Fonterra's strategy to develop a leading position in the global infant-formula market.

"Infant formula is the fastest-growing dairy category in the world," he said.

"Demand is particularly strong in Asia, where China is the leading global infant-formula market."

Fonterra was the centre of a botulism scare last year that sparked a mass recall of whey products before testing revealed it was a false alarm.

The dairy co-operative still faces legal action from French food giant Danone, which has said it lost €350 million (NZ$544m) as a result of the recall.

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