Cathedral City cheese maker Dairy Crest said yesterday it had struck a deal with New Zealand dairy giant Fonterra to tap into the £7bn Chinese baby formula market.
The five-year deal will see Fonterra sell Dairy Crest’s whey – the key ingredient in baby formula and a by-product of cheese making – to fast growing markets, including China.
Dairy Crest also announced a joint venture with Fayrefield Foods to make galacto-oligosaccharide (GOS), an ingredient that occurs in breast milk and helps to protect babies from bacteria.
The company, which is already investing £45m to make whey at its creamery in Davidstow, announced a further £20m to make GOS.
Fonterra will receive a commission to sell all the demineralised whey to brands overseas and will also provide technical and engineering support. It will also sell GOS and supply the lactose needed to mix with it.
Dairy Crest expects the whey to contribute around £5m to earnings in 2015/16. It will start making both products that year.