Synlait Milk plans to invest about $125m in an advanced liquid dairy packaging facility to supply Foodstuffs South Island with private label fresh milk and cream from early 2019.
The company said it would set up a platform to pursue an array of dairy-based products for domestic and export markets in future.
Synlait said its partnership with Foodstuffs South Island is strategic for both parties.
Value and Pams branded products will be used to package fresh milk and cream supplied by Synlait.The products are available across New World, PAK'nSAVE, Four Square and On The Spot stores.
The research and development center of Synlait in Palmerston North will offer the technical new product development expertise required to establish, validate and deliver the capabilities at the company.
The estimated $125m investment in an advanced liquid dairy packaging facility intends to delivering a liquid blending and packaging platform.
It will enable Synlait to produce fresh milk and cream for domestic use and the ability to pursue a range of dairy-based extended and long-life consumer products in future.
Synlait Milk managing director and CEO John Penno said: “Combined, the partnership with Foodstuffs South Island and investment in a new facility is a further and significant step towards our goal of being a more diversified and balanced business.
“We believe this opens up a new category – everyday dairy – and has the potential to both leverage our current position and explore new customers and markets.”