FONTERRA Australia and Bellamy's Australia Limited (Bellamy's) will join forces in a multi-million dollar strategic venture to manufacture a range of new baby nutritional powders next year.
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The project proposal involves Fonterra's Darnum Park site in Victoria's West Gippsland which currently produces whole, skim and specialty nutritional milk powders for domestic and export markets.
Fonterra recently invested more than $45 million in the site to upgrade its nutritional products output.
"We are actively growing our nutritionals business through strategic partnerships and agreements which will see the Darnum nutritionals plant move towards full capacity," said Fonterra's Oceania managing director, Judith Swales.
Bellamy's, one of the fastest growing infant formula companies with strong brand recognition in the organic ingredient supply chain, achieved revenue growth of 156 per cent 2014-15 on the prior year's sales
Formula comprised about 88 per cent of Bellamy's sales.
The proposed five-year strategic agreement is expected to help support the growth of Bellamy's in Australia and abroad, providing a timely production booster for the infant formula company as it struggles to keep up with demand for product in China and Australia
New Zealand-owned Fonterra is describing the deal as a key part of its business transformation plan for of its Australian business.
"This is our strategy in action for Australia where we focus on the areas we can win in a highly competitive market to deliver the best returns," Ms Swales said.
The big NZ co-operative had "a clear plan to return its Australian business to strong and sustainable profitability".
"Our Australian business has particular ingredients strengths in cheese, whey and nutritionals, complemented by our strong consumer and food service businesses," Ms Swales said.
"Today's announcement with Bellamy's Australia - one of the fastest growing infant formula companies - reaffirms our strength in nutritionals.
"The Darnum plant is a leading nutritionals site in Fonterra's global network.
"Leveraging our Fonterra Research and Development Centre in Palmerston North (NZ), the largest dairy innovation centre in the southern hemisphere, we will bring innovation to the Darnum plant and the nutritionals market to capture growing demand."
Ms Swales said Fonterra was nearing a finalisation of the Darnum joint venture with Beingmate Baby and Child Food Company following the recent formal approval by Beingmate's directors and shareholders.
Fonterra and Bellamy's intend to finalise their proposed arrangements by year's end, with the agreement commencing in 2016.
