The Irish Dairy Board is to spend EUR30m on butter production and R&D at a site in its domestic market.
The Kerrygold owner said the production and packaging facility in Mitchelstown in County Cork would create 50 jobs.
The site will have a capacity of 50,000 tonnes and serve as an “innovation centre” for the Kerrygold brand, the largest butter brand in Germany.
With the end of EU milk quotas on the horizon in 2015, the IDB said it has “ambitious expansion plans” for the business.
News of the investment came as the IDB reported its financial results for 2013, which included higher sales and improved pre-tax profits.
The co-operative said Kerrygold had enjoyed “record sales”. It has a 17% share of Germany’s butter category and is the number one imported butter in the US.
“The marketing and selling of Irish dairy products across global markets has never been more important. With the recent announcement of the extension of the Group’s financing facility to 2019, and plans now in place to build a fully integrated, state-of-the-art Kerrygold butter production and packing facility in Cork, the IDB continues to prepare the business for the exceptional opportunities the post quota environment will bring,” the IDB said.
Last month, the IDB said a new refinancing deal would help fund expansion, including possible acquisitions.