In a statement, Fonterra chief operating officer Anna Palairet saidthe investment was "part of Fonterra’s broader strategic asset road map supporting long-term growth in high-value dairy categories".
"The expansion will create 16 new jobs at the site, supporting the local economy."
Ms Palairet said construction at the Clandeboye site would start in December this year, commissioning was scheduled for early 2027 and first product was expected off the line in April 2027.
She said the expansion of the Clandeboye site strengthened Fonterra’s network in the South Island by improving flexibility and resilience.
The announcement came as part of the next phase of strategic investments by the co-op, signalled in its FY25 annual results.
Chief executive Miles Hurrell said the co-op planned to invest up to $1billion over the next three to four years in projects that would generate further value for farmers and drive operational cost efficiencies.
"We’ve said that through focused execution of strategy we are targeting our earnings to be back at FY25 levels by FY28 if the Mainland Group business is divested.
"This investment supports that goal by increasing our production of a high-value product and improving our product mix by adding value to milkfat," Mr Hurrell said.
The investment would enable construction of a new butter line at Clandeboye, expanding the site’s current butter production capacity by up to 50,000 metric tonnes (MT) per annum.
The new butter line at Clandeboye would expand the co-op’s capacity to produce a range of butter formats, tailored for both global ingredients customers and professional kitchens.
The plant would be capable of producing products that met diverse market requirements, including halal and kosher certifications, "supporting our growth in key international markets".
He said global demand for butter continued to grow, "and this investment positions Fonterra to better serve customers worldwide".
The organisation had recently invested $64m at Clandeboye for the conversion of two coal boilers to wood pellets, a crucial step in Fonterra’s commitment to exit coal by 2037. The conversion was completed in August 2025.
This is Fonterra’s third investment in the South Island in the past year. Others include:
- A $75m investment in an advanced protein hub at Studholme to be sold through the co-op’s ingredients business, catering to the fast-growing high-protein market for medical and sports nutrition. Construction is expected to be complete in early 2026.
- $150m investment in a new UHT cream plant at Edendale to unlock additional capacity for high-value product sold through the Foodservice business. Construction is expected to be complete in the second half of 2026.
— Allied Media
