UK-based Dairy Crest has entered into a deal with New Zealand based Fronterra, which will see Dairy Crest moving further into the infant formula market in some of the world's emerging markets, with the production of demineralised whey powder.
Last year Dairy Crest invested in its creamery in Davidstow, England so it could produce demineralised whey powder, with the company pouring around £45 million in the venture.
The deal is particularly significant as Fronterra has access to dairy markets in Asia and Latin America. The deal is set to last a minimum of five years and Fronterra will sell all the demineralised whey produced by the Dariy Crest's creamery.
They have also entered into a second deal with Fronterra and Fayrefield foods, which will see Dairy Crest invest £20 million into its plant to produce a lactose based prebiotic, galacto-oligosaccharides (GOS), which is used in infant formula. Fayrefield will supply an enzyme and Fronterra will provide the lactose and market the prebiotic.
Commercial production of whey at the plant is due to start in the first half of next year, with the prebiotic side of the business due to start later in the year.
Dairy Crest has four main dairy brands, Frijj milkshake, Catherdral City cheese, Clover spreads and Country Life butter and these new deals are part of its strategy to add value. Dairy Crest has been attempting to strengthen and refocus their business for the past two years by exploring various opportunities. These deals will give them access to the lucrative Chinese baby food market and should help Dairy Crest diversify its business and maintain market share.
© 2014 European Supermarket Magazine by Nicole Gernon
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