Fonterra Breaks Ground on $75M Butter Plant Expansion to Drive High-Value Milkfat Strategy

Fonterra has officially commenced construction on a $75 million expansion of its butter plant at the Clandeboye site in South Canterbury. The project involves the installation of a larger butter line designed to increase processing capacity and diversify product formats, aligning with the co-operative’s broader strategy to maximize returns from high-value milkfat products.

This expansion is a key component of Fonterra’s committed capital investment plan, which allocates up to $1 billion over the next three to four years towards projects that drive operational efficiency and generate value-added growth.

Halal, Kosher, and Export Formats

Clandeboye is currently Fonterra’s only site producing butter in the South Island. The new line will significantly expand the site’s manufacturing agility, enabling the production of a wider range of butter formats specifically tailored for overseas customers and professional kitchens.

Crucially, the upgrade will allow the facility to produce certified halal and kosher options, opening up access to specific high-demand global markets.

Ross Burdett, Clandeboye Site Manager, highlighted the dual benefit of the project: "The new butter line will allow us to produce a wider range of butter formats for customers around the world, while creating 16 new jobs here in South Canterbury and strengthening the co-op’s South Island manufacturing network."

Construction Timeline and Project Status

The project is moving rapidly, with the design stage nearing completion and demolition work already underway.

Immediate Phase: Excavation, foundation, and drainage work will be completed prior to the construction of the new butter process hall.

Infrastructure: Installation of new piping linking milk treatment areas to the butter line is scheduled to begin shortly.

Milestones: The exterior of the building extension is expected to be visible by April.

Completion: The first product is projected to come off the new line in approximately 15 months.

Market Context

The expansion reflects a wider industry trend where dairy processors are pivoting from commodity bulk powders to specialized, high-margin ingredients. By enhancing its ability to produce sophisticated butter formats, Fonterra is positioning itself to better serve the premium foodservice and bakery sectors globally.