The deal was announced just hours before news broke that Fonterra had a quality issue with an ingredient used in infant formula's which it had supplied to a number of companies including Danone.
Devondale-Murray Goulburn (Devondale-MG) is making a $2.5 million investment in equipment at its Koroit plant in western Victoria to provide the additional value-add nutrition ingredients capacity.
Devondale-MG Managing Director Gary Helou said the investment would enable the Co- operative, which processes one-third of Australia’s milk, to meet Asia’s rapidly increasing demand for GUMPs, a dairy nutritional product for young children.
“Over the past three years, Devondale-MG has experienced strong and sustainable increases in demand for its ingredients from Danone’s nutrition division, driven by rising Asian demand for GUMPs, and nutritional powders,” Mr Helou said.
“Partnering with Danone offers Devondale-MG a significant opportunity for growth in an important line of product for our Co-operative. We are increasingly focusing on producing higher value and speciality ingredients such as GUMPs, as they provide higher margins and reduce our exposure to the more price volatile commodity products.”
GUMPs is amongst the fastest growing dairy nutritional category, increasing between 10 to 20 per cent each year. Devondale-MG began supplying GUMPs base to Danone in Malaysia in July 2011 and Thailand in December 2012.
