Niche dairy processor Camperdown Dairy Company (CDC) has signed a significant new processing agreement with an international food company.
The company, a subsidiary of the publicly-listed Australian Dairy Farms (ADF) Group, said confidentiality agreements meant it could not release details of the new product it will produce until it was launched in July.
But ADF said the sales of new product were expected to exceed $30 million in the first four years of production.
ADF chief executive Peter Skene said the new venture would create more jobs at CDC’s plant in the former Bonlac factory in Camperdown.
He said the new venture would increase the volume of milk sourced from western Victoria that was processed at the Camperdown plant milk but CDC had enough milk supply for the new product.
ADF has six dairy farms in western Victoria and also had “lots of offers for milk” from other suppliers, Mr Skene said.
He said the company had commenced an immediate expansion of its production capacity at its Camperdown plant to produce the new product. ADF said the cost of the expansion at the Camperdown plant will be about $750,000.
Successful manufacturing trials for the product range have been conducted at CDC over the past two months with the combined production teams of CDC and the customer.
Production of the new product is due to commence in early July.
ADF said CDC senior management had been developing the business case for the new product with the international foods business since August 2017.
CDC had recently negotiated the contract for the new product with a successful, though not widely known, specialty dairy manufacturer and brand owner of a range of premium, specialised, fresh dairy products that had been achieving high levels of success in other international markets over many years, ADF said.
Mr Skene said the new venture meant CDC would eventually outgrow its Manifold Street site but no decision had yet been made on when it would start construction on a new factory at a site it has bought on the Old Geelong Road at Camperdown.
He said most of the equipment for the new venture was movable and could be relocated to the new factory when it was built.
ADF said the new venture was part of its strategy to reduce its concentration on highly competitive conventional white milk production to high value-added products of its own brands and contract packing of premium brands owned by others.