Fonterra opens Australia plant as demand soars for pizza cheese toppings in China

By Jenny Eagle

- Last updated on GMT

Fonterra opened a mozzarella plant in New Zealand last year. Picture: Fonterra.
Fonterra opened a mozzarella plant in New Zealand last year. Picture: Fonterra.

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Fonterra Co-operative Group has expanded its operations in Australia, opening a plant in Victoria, to meet demand for cheese pizza toppings in China.

The $111m plant in Stanhope, Victoria, will make cheese for the Chinese, Japanese and other markets, according to Japanese business publication Nikkei Asian Review.

Rich flavor, natural yellow color

Fonterra said as Western pizza restaurants gain popularity in China and half of the pizzas eaten in the country use Fonterra cheese, demand for cheese is strong.

Rene Dedoncker, managing director, Fonterra Australia, said cheese from Australia and New Zealand is made with milk from grass-fed cows, which gives it a rich flavor and natural yellow color.

He said there is room for growth in the Japanese market, adding cheese consumption is rising 3% a year.

The Fonterra Victoria plant replaces a facility that was destroyed by a fire in December 2014.

It boasts a 50% higher production capacity, producing 45,000 tons of mozzarella and other cheeses including cheddar, parmesan and romano, a year.

At the opening ceremony, John Wilson, chairman, Fonterra Board of Directors, said the facility was ‘a strategic investment with an eye toward global cheese consumption’.

Mozzarella plant

Fonterra opened a $240m mozzarella plant to produce individually quick frozen (IQF) mozzarella in Clandeboye, New Zealand, last year, the largest producer of natural mozzarella in the Southern Hemisphere.

Robert Spurway, COO, Global Operations, Fonterra, said at the time demand for mozzarella out of China and wider Asia continues to grow as more consumers seek natural dairy products.

IQF mozzarella reduces the processing time from three months to six hours, and is one of the Co-operative’s most tightly-kept secrets.

The technology, developed by the Fonterra Research and Development Centre, has been supported by Transforming the Dairy Value Chain – a Primary Growth Partnership (PGP) programme between the Ministry of Primary Industries, Fonterra and DairyNZ.

40% of people in urban China now eat at Western style fast food outlets once a week, and the use of dairy in foodservice has grown by over 30% in five years​,” said Jacqueline Chow, COO, Global Consumer and Foodservice, Fonterra..

We see massive growth potential and our teams in the market are continually working to grow this valuable part of the business as we work towards foodservice becoming a $5bn business by 2023​.”

Dairy product usage in China's restaurant industry has grown 30% over the last five years, according to US research firm Nielsen.

Expansion Australia

Fonterra has expanded its Australian operations in recent years, capitalizing on lower dairy tariffs from free trade agreements with China and Japan that took effect in 2015.

The volume of milk the company processes in Australia had jumped 30% year on year through June, with the bulk of it made into cheese bound for Asia, Dedoncker said.

Fonterra, New Zealand's largest business, is the world's sixth-largest dairy company by sales, according to the Dutch lender Rabobank. It exports dairy products to 140 markets, including Japan, where it accounts for around 30% of cheese imports.

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