Whipping up magic out of milk

By LIAM DANN

There is no obvious sign of Oompa-loompas but the Fonterra Research Centre has the feel of a Willie Wonka factory, full of sweet smells and strange new products.

Now officially the headquarters of Fonterra's new marketing and innovation division, it is one of the world's largest dairy research facilities with 70 staff with PhDs and 232 workers in active research roles.

If Fonterra is to boost farmer payouts by earning more money from high-value-ingredients products, this is where the groundwork will be done.

The centre already enables Fonterra to produce more than 1000 products from cow milk.

It is housed in a complex that dates back to the 1960s when it began life as the New Zealand Dairy Research Institute.

At its core is a mini dairy factory with the vats and pipes to produce all the products Fonterra makes at its bigger commercial operations.

Called the pilot plant, it regularly tests improvements to old products - spreadable butter was first made there - and can also create new concoctions.

Food safety restrictions mean no visitors are allowed on the factory floor.

Surrounding the factory is a seemingly infinite number of laboratories containing all kinds of weird and wonderful machinery.

One impressive device is designed to shake a mysterious group of complex dairy proteins out of hiding.

Milk consists of several well-established proteins that have been used in dairy ingredients for years. But it also contains hundreds of smaller proteins about which very little is known, explains research scientist Julian Reid.

One, called lactoferrin, has been proven to provide incredible benefits to the immune system.

It was likely there were other as-yet unidentified benefits to be gained from these complex proteins and they could be worth a fortune in the nutraceutical market, says Reid.

"If we could find another lactoferrin we'd be very happy."

Behind another door is a department that smells like strawberry instant pudding. It is the place where strange confections such as Fonterra's new high-energy endurance bar are cooked up.

Fonterra has high hopes for the bar, which is designed for high-performance athletes.

With a rubbery fudge-like texture, in banana and caramel flavours, the endurance bar doesn't taste too bad but its high fat content would scare off calorie counters.

In fact, the fatty coating it leaves around your mouth is a plus for athletes such as cyclists who tend to suffer from dry mouths while they race, says Emily Small, who handles marketing for the project.

Bars like this might be niche products, but internationally they can still tap into some big markets.

In the US alone there are 85,000 endurance athletes who claim to do more than 90 minutes exercise at least five times a week, says Small.

The endurance bar and most of the other new products created at Palmerston North are mock-ups, prototypes created to show customers what can be done with Fonterra's ingredients.

Another example is a range of clear energy drinks that Fonterra scientists can infuse with up to 25 per cent of a person's daily protein needs.

It isn't Fonterra's plan to get involved in the high-cost business of developing its own brands, Small says.

Convincing big corporate customers that Fonterra has the ideas and innovative products for their needs is the goal, she says.

It is not uncommon to see intriguing cookies or chocolate bars lying around in the centre's laboratories.

Of course no one will reveal what special innovations they contain, but it is a good bet that they represent some of the initiatives that marketing and innovation director Bob Major says will be accelerated through to commercial production in the next few years. If there is a Willie Wonka presiding over this factory it is Major, a dairy industry veteran who has been charged with significantly lifting the ratio of revenue Fonterra earns from value-added ingredients.

In the past three years the value of the ingredients business had grown from 5.5 per cent of revenue to just under 10 per cent - about $1 billion. But Fonterra wants to lift that percentage at an even faster rate.

Major is confident the new structure will ensure that happens.

There has never been a problem with the quality of science being done by Fonterra, he says. Where work was needed was in integrating what was happening in the labs with market trends and customer demands.

Staff at the centre know they have to be at the top of their game.

Chat to workers anywhere in the building and they say the pressure is on to perform. To their credit they seem enthusiastic about the challenge.

"There is a general feeling of excitement," says Andrew Shrenk, the centre's general manager of planning and integration. "We're part of something really great."