Nutricia to expand milk drying capacity in New Zealand

Nutricia, a subsidiary of France-based yoghurt producer Danone, has signed an agreement to acquire Gardians’ spray dryer, as well as the blending, packing and can-forming assets of Sutton Group in New Zealand.

This move comes after Danone terminated its contract with Fonterra for the losses it suffered following the whey protein concentrate (WPC80) botulism scare last year.

In August 2013, a botulism alert by Fonterra prompted a recall of certain infant formula products in more than seven countries. However, further investigations revealed the presence of clostridium sporogenes, which does not cause botulism.

Danone is seeking compensation from Fonterra for losses incurred due to the recall of its Dumex and Karicare products in Asia and New Zealand.

As part of the latest deal, Nutricia will acquire Gardians’ drying plant in South Island, as well as its milk supplier.

Gardians’ drying plant has a capacity to produce approximately 20,000t of powder, which is almost equal to that of Nutricia’s North Island plant.

The South Island plant is set to produce Karicare and Aptamil brands of Danone, which are sold in New Zealand and exported to Australia, Hong Kong, Taiwan and China, according to Nutricia.

Sutton Group’s blending and packing plant in Auckland will help Nutricia increase its exports of infant formula to China.

Nutricia said: "This transaction will provide Nutricia with a large milk drying capacity, along with a long-term fresh milk supply access.

"With this investment, Nutricia not only pursues the development and diversification of its base powder sourcing, but also reinforces its New Zealand heritage."

The transaction, which is subject to standard regulatory approvals, is expected to be completed in the coming months.