New Zealand dairy firm A2 Corp. has started the construction of a processing facility in Sydney to meet growing demand for its products in the country, the company has said.

Production at the facility, in the south-west of the city, is expected to begin in January. The plant is the first to be operated by the company in addition to its use of contract processors.

Chairman Cliff Cook said: "Our a2 milk business in Australia continues to grow rapidly and the development of our own processing facility will allow for the continued expansion of the business. Sales growth has exceeded expectations in the six months to 30 June."

The facility will process around 10m litres of milk per annum initially with the capacity for higher volumes over time.