Dairy Crest and Fonterra partner to sell infant formula products

UK-owned dairy foods company Dairy Crest has announced a strategic partnership with Fonterra to sell two products in the global infant formula market.

The products include demineralised whey powder and galacto-oligosaccharide (GOS), according to Dairy Crest.

Dairy Crest had previously revealed a £45m investment to manufacture demineralised whey powder, which is the base ingredient in infant formula.

This product will be produced from the whey generated at Dairy Crest’s cheese-making factory, located at Davidstow in Cornwall, UK.

Fonterra will provide technical and engineering support to produce whey powder and will also receive a commission to sell all of Dairy Crest’s demineralised whey production.

The agreement will be for a period of five years.

Dairy Crest also announced a £20m capital investment at its Davidstow site and will enter into a joint venture with Fayrefield Foods to produce GOS.

Fayrefield will provide access to the necessary enzyme and other intellectual property.

Fonterra will supply lactose for this project, as well as involve in marketing and selling of this product, which is expected to provide an eight-year cash payback for Dairy Crest.

Demineralised whey powder commercial production is expected to start in 2015 at the earliest, while production of GOS is expected to commence later.

Dairy Crest chief executive Mark Allen said that demineralised whey powder and GOS form an important part of the firm’s strategy to grow added value sales.

"We are looking forward to working with Fonterra and Fayrefield Foods to bring these two innovative new products to market," Allen said.

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Image: Dairy Crest has signed a partnership agreement with Fonterra to sell infant formula products. Photo: courtesy of Dairy Crest.