Co-op invests $75 million to expand butter production

Fonterra is investing $75 million to expand butter production at its Clandeboye site in South Canterbury.

The move is part of the next phase of strategic investments signalled in the Co-op’s FY25 annual results and is its third investment in the South Island in the past year.

Fonterra CEO Miles Hurrell says the Co-op plans to invest up to $1 billion over the next three to four years in projects that will generate further value for farmers and reduce operational costs.

“This investment increases our production of a high-value product and improves our product mix by adding value to milkfat,” Miles says.

The investment will mean construction of a new butter line at Clandeboye, expanding the site’s current butter production capacity by up to 50,000 MT per year.

The new butter line will also expand the Co-op’s capacity to produce a range of butter formats, tailored for both global ingredients customers and professional kitchens.

The plant will be able to make products that meet diverse market requirements, including Halal and Kosher certifications, supporting growth in key international markets.

Miles says global demand for butter continues to grow, and this investment positions the Co-op to better serve customers worldwide.

A stronger South Island network

Fonterra’s Chief Operating Officer, Anna Palairet, says the expansion of the Clandeboye site strengthens the Co-op’s network in the South Island by improving flexibility and resilience.

“This investment is part of Fonterra’s broader strategic asset roadmap supporting long-term growth in high-value dairy categories. The expansion will create 16 new jobs at the site, supporting the local economy,” Anna says.

Construction at the Clandeboye site started in December, with commissioning scheduled for early 2027 and first product expected off the line in April 2027.

This initiative at Clandeboye follows other investments in the south over the past year, including a $75 million investment in an advanced protein hub at Studholme to be sold through the Co-op’s Ingredients business, catering to the fast-growing high protein market for medical and sports nutrition. Construction is expected to be complete in early 2026. An additional $150 million investment was made in a new UHT cream plant at Edendale to unlock additional capacity for high value product sold through our Foodservice business. Construction is expected to be completed in the second half of 2026.

The expansion at Clandeboye will see more lactic and unsalted butters produced

Traditional churned lactic butter is a European-style product made using a high-speed version of traditional hand-churning. Known for its rich, tangy flavour and dense, creamy texture, lactic butter is ideal for premium applications. Popular in Middle Eastern cuisine as well as western and local bakery products, the Co-op sells lactic butter direct to customers under its Ingredients brand, NZMP.

The unsalted butter produced at Clandeboye will be used for both Ingredients and Foodservice customers. Unsalted butter is a popular choice in products such as croissants, danishes, bread, cakes and cookies, and is increasingly used in traditional Chinese pastries. The Co-op sells unsalted butter direct to customers under its Ingredients brand, NZMP, and Foodservice brand, Anchor Food Professionals.