Japanese food group Meiji Co. has announced plans to invest Y48bn ($331m) in the construction of a new domestic dairy production facility in Nakashibetsu, Hokkaido.

Building the new plant will allow the company to “reorganise” its manufacturing sites in the region, it said.

The yet-to-be-named site will replace the “deteriorating facilities” at Meiji’s Nishi Shunbetsu and Honbetsu plants and allow for more “stable provision of dairy products”.

Nishi Shunbetsu focuses on the production of non-fat dry milk, concentrated skimmed milk, butter and cream, while Honbetsu makes concentrated skimmed milk and cream.

The new 230,258 square metre space will continue to make all products formally made at Honbetsu and Nishi Shunbetsu, as well as milk protein.

Products will be made for both retail and B2B purposes.

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Meiji, a subsidiary of Meiji Holdings Co., said the facility will have production capacity of 430,000 tons of raw milk a year, with the expectation that this will eventually increase to 500,000 tons.

The group added that the site will have “sustainable added value that is friendly for people and the environment” and allow the business to “increase the inherent value of milk in addition to our existing [dairy] products”.

It is unclear how many jobs will be impacted by the Honbetsu and Nishi Shunbetsu closures, nor is it known whether employees will be able to transfer to the new location.

Meiji said it will on “labour reduction” at the new site, via “IoT [internet of things] and facility automation”. The technology will help the company “pursue productivity improvements” and develop a more “comfortable work environment”, it said.

The multi-million investment will also be used to implement “new technology and production methods” to cut down carbon emissions and groundwater drainage by 50%, in comparison to its other factories.

Construction has been scheduled to commence in April next year, with the space expected to be operational by March 2027.

Production at Nishi Shunbetsu is due to cease in May 2027, and by September 2027 at Honbetsu.

Meiji said its investment in the new site would have a “minor” impact on its financial results for the year.

In its consolidated financial results for the first six months of the fiscal year ending March 2024, Meiji Holdings booked a 5.5% increase in net sales from 2022, reaching Y549bn. Its operating profit was also up 2.9% at Y44bn.

In 2020, the group announced it was setting up a new unit in China for the production and marketing of milk, yogurt and confectionery in the south-eastern city of Guangzhou.