Synlait managing director Dr John Penno said Synlait has been looking at opportunities that reduce its exposure to China.
“We are cognisant of ensuring our infant formula business does not become overly reliant on the China market and so Munchkin, with its focus on the United States market, is a potentially important addition to our growing portfolio of retail-ready infant formula customers,” Penno said.
The raw milk used to manufacture the formula is subject to a new grass-fed standard co-developed by Munchkin and Synlait.
It requires cows to be exclusively grazed on a pasture and crop-based diet with no feeding of grain, or feed not grown in New Zealand.
Farmers will be independently audited to ensure they meet and maintain the standard.
Munchkin chief executive Steve Dunn said the partnership is a big opportunity for Munchkin.
“Our forecast gross revenue for FY15 is over US$300 million, and we expect the growth of the grass-fed infant formula business to contribute significantly to our bottom line over time.”
Penno said the product is a unique value-added opportunity that will reward a small group of Synlait suppliers who choose to follow the new standard by paying them a premium for their milk.
“Our focus is on ensuring we continue to provide our milk suppliers with opportunities to earn more for their milk, over and above the base milk price.”
