Friesland Domo - the company's nutritional and pharmaceutical subsidiary - announced it had agreed a memorandum of understanding with Warrnambool over construction of a new €30m production facility.
Under the agreement, the two companies will work together under the name Great Ocean Ingredients, to tap growing demand for prebiotic ingredients like Vivinal GOS in the global beverage and infant nutrition markets.
"The joint venture's available production capacity, combined with the current capacity of Friesland Foods Domo (over 35,000 tonnes/year in aggregate) is more than adequate to meet the growing demand for Vivinal GOS in the near future," said Friesland.
Prebiotics are a category of ingredients that stimulate the growth of probiotics, so-called 'friendly bacteria' that occur as part of the gut's natural microflora and are understood to play a part in gut and immune health, Vivinal, an ingredient containing galacto-oligosaccharides, is marketed for health and fibre enrichment applications.
Pursuit of the beverage and infant formula markets is particularly timely.
Beverages represent one of the most popular formats for functional products, partly because they are convenient and allow consumers to get the nutrients they need 'on the go'.
In the case of infant formulas, omega-3 and probiotics have been used for some time but prebiotics are only just starting to appear in products, as formulators strive to replicate as closely as possible the nutritional profile of natural human breast milk - which is rich in oligosaccharides.
While marketers stress that infants should receive their mothers' milk when possible, the rationale behind their strategy is to reduce the chance that those who do not will be at any developmental disadvantage.
Friesland hopes its expertise in development and production of dairy-based ingredients, along with Warrnambool's supply capabilities, will make Great Ocean Ingredients a key player in the well being food and pharmaceutical market.
The new plant is expected to be operational in mid-2008 and is situated in close proximity to Warrnambool's existing plant in Allansford, near Victoria, which will allow the venture to optimise is prebiotic output.