The move marks the beginning of a new formal supply agreement between Fonterra and Beingmate for high value infant and child formula mixes produced in Australia, to supply booming Chinese demand for safe and high quality nutritional milk based powders. The infant formula is being manufactured at the hi-tech processing plant in Darnum, Victoria.

Judith Swales, managing director of Fonterra Australia, said the Darnum plant in Gippsland, would become the global centre of Fonterra’s high value nimble manufacturing of specialist paediatric nutritional powders, based on its year round access to local high quality fresh milk.

Fonterra has just finalised its NZ $740 million (€466 million) purchase of 18.8% of Beingmate, the 22 year old private Chinese company that has 1000 stores in China and 10% share of the country’s $18 billion (€11.5 bn) infant formula market.

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In a separate deal, still being completed, Beingmate will aquire 51% of a new JV that will own the Darnum plant and the right half its annual 50,000 tonne output, while Fonterra will remain the factory’s operator, manager and 49% owner of the JV.

Judith Swales said the Chinese paediatric nutritional markets, which include infant formula for babies from birth to six months old, a follow on formula tailored to 6-12 months old babies and another milk based formula for toddlers is set to double in size to $3.7 billion (€2.33bn) by 2017.