Investors have raised a glass to the Australian Dairy Nutritionals Group as it continues its shift from white milk to infant formula with the $5 million purchase of an offshore powder processing plant
The group said the mixing, evaporation and drying plant – which is set to be disassembled and rebuilt at the group’s Camperdown Dairy Park site – has the initial capacity to produce 400,000 to 600,000 tins of infant formula each year, with the company hoping to produce its own branded range of organic infant formula by mid-2020.
The group did not specify where the plant was currently located, only that the vendor was a producer and exporter of infant formula into the Chinese market that had outgrown the production capacity.
Shares in Australian Dairy Nutritionals rose nearly 13 per cent to 14 cents at 1445 AEDT.
“The board sees the purchase of this plant as a way to accelerate its entry into the organic infant formula market in a sensibly staged manner without the initial, much higher cost of a large dryer having significantly more capacity,” the group told the ASX on Thursday.
Australian Dairy Nutritionals it is in the midst of shifting its focus on low margin commodity milk sales in favour of building higher margin brands and sales through organic infant and toddler formula products.
In December, the company entered the booming organic formula market by finalising its acquisition of Flahey’s Nutritionals for $1.5 million.
It said its mixing and drying plant is expected to arrive in Australia in September.
The group said the purchase also included a stand-alone cheese making plant, which will be used to produce specialty organic dairy ingredients including organic whey.