Dairy Crest is to team up with Fonterra and Fayrefield Foods to produce and supply ingredients to infant formula manufacturers.

Dairy Crest’s deal with Fonterra will see the New Zealand dairy giant sell the demineralised whey powder made at the UK firm’s site in Davidstow in Cornwall.

The company is also spending GBP20m at Davidstow to produce galacto-oligosaccharide, a lactose-based prebiotic used in infant formula. UK-based dairy firm Fayrefield Foods will supply an enzyme used in the ingredient and “other intellectual property”. Fonterra will provide the lactose and market the prebiotic.

Commercial production of the whey powder is expected to begin “early” in Dairy Crest’s 2015/16 financial year. Dairy Crest will start manufacturing the galacto-oligosaccharide later that year.

Mark Allen, Dairy Crest’s chief executive, said the deals gave the owner of UK brands including Frijj milkshake and Country Life butter “exposure to global growth opportunities”.

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By GlobalData

“Demineralised whey powder and GOS form an important part of Dairy Crest’s strategy to grow added value sales,” he said.