Fonterra will acquire a 20% stake in Chinese infant food manufacturer Beingmate and also invest nearly $555m in expanding its milk production units in New Zealand.untry.

The stake in Beingmate will provide Fonterra a direct line into the Chinese infant formula market.

The New Zealand-based company said it aims to create an integrated global supply chain from the farm gate to China’s consumers, using its milk pools and manufacturing sites in New Zealand, Australia, and Europe.

Fonterra CEO Theo Spierings said: "By working together with Beingmate, we will strengthen our infant formula brand presence in China and link China to high quality ingredients from New Zealand, high value paediatric products made at Darnum in Australia, and whey specialty ingredients manufactured at our new plant in Heerenveen in the Netherlands and in alliance with Dairy Crest in the UK.

"We will also work with Beingmate to evaluate mutual investments in dairy farms in China."

Fonterra and Beingmate will set up a joint venture to purchase Fonterra’s Darnum plant in Australia and will establish a distribution agreement to sell Fonterra’s Anmum brand in China.

"Our strategy is to increase earnings by driving more milk volume into higher value categories globally by turning the wheel from commodities to higher-margin products," Spierings added.