Fonterra to open $15m Melbourne R&D centre

Giant New Zealand-based global dairy company Fonterra has revealed plans to establish a new AUD$15 million global consumer foods R&D centre in Melbourne's eastern suburbs.

Victoria's minister for innovation and state and regional development, John Brumby, and Fonterra's innovation director, Bob Major, made the announcement at a joint press conference in Melbourne this morning.

Major said his company, which already spends NZ$90 million on R&D annually, will invest $22 million in building and equipping the centre by the time it is fully operational in 2009.

Victoria offered payroll tax concessions and other, undisclosed assistance to attract Fonterra. New Zealand's largest company, and the world's largest dairy products manufacturer, investigated other locations in Europe, Asia and New Zealand before opting for Melbourne.

Brumby said the new centre would employ around 150 people, mainly in skilled R&D positions. Major said many will be recruited within Australia, but some research staff will be relocated from Fonterra's main R&D centre in Palmerston North, without any overall loss of staff or diminution in the company's investment in R&D in the Palmerston North centre. Major described Fonterra as the world's leading company in dairy-based innovation, and NZ's largest investor in the private sector. "Our business is taking milk apart and putting it back together," he said Australia.

The company had chosen Victoria because, with the Australian government, it had created a favourable environment for the investment. The new centre, the first of its kind in Australia, would further position Australia at the forefront of the global dairy industry, and boost Melbourne's status as a leading centre for food and nutrition R&D.

"Selecting Melbourne made a lot of sense," Major said. "It's one of the largest bases for our brands business. Victoria is the food bowl of Australia, Melbourne is one of the top cities in the world to live in, and the R&D-conducive environment gives Fonterra improved access to world-class talent."

Aidan Coleman, MD of Fonterra Brands (Australia) said Australia currently accounts for 14 per cent of Fonterra's retail dairy products sales, yielding over $1 billion in sales.

Fonterra will collaborate with a number of Australian dairy industry operators, and has already begun a joint project with the Murray Goulburn Dairy Cooperative on heat inactivation of bacteria in milk.

Some of Fonterra's recent innovations included crisps fortified with whey proteins, clear milk-protein enriched fruit drinks for consumers who wanted dairy proteins without milk, a special low-carbohydrate, high-protein yoghurt that could be included in the popular high-protein Atkins diet, and probiotic drinks containing beneficial lactic acid bacteria that boosted immunity to gastrointestinal infections.

Don't mention GM

But the new R&D centre will not be involved in developing genetically modified products. In June last year, Fonterra announced a 40 per cent cut in funding for its biotechnology subsidiary, ViaLactia, saving it NZ$5 million.

It said it would concentrate its research on projects it believes can deliver a direct return to Fonterra and its farmer shareholders.

Major said Fonterra would contract out some of the centre's research to other agencies or academia. He acknowledged that the prospect of winning research funding from Australian government and industry sources had been a "small consideration" in its decision to locate the new centre in Melbourne.