Glanbia is to invest in a greenfield cheese facility in Michigan, which will add around 30% to the group’s available capacity in the US. Glanbia will take a 50% share in the joint venture, with Dairy Farmers of America, Michigan Milk Producers Association and Foremost Farms taking the other 50%.

While Glanbia will run the business and factory operations, the agreement will see the Michigan Dairy Partners LLC supply all the milk required by the plant.

The new plant, when fully commissioned, will be among the largest cheese manufacturing plants in the US with a daily intake of 3.6m litres or 1.3bn litres per annum and is expected to be up and running in the second half of 2019.

This will add up to 140,000t of annual cheese capacity to Glanbia.

In terms of comparisons on scale, the Glanbia Southwest Cheese plant in New Mexico can take 11m lb of milk per day and is the largest single-site manufacturer of premium quality block cheese.

Why a joint venture?

Glanbia already has a joint venture (JV) structure in New Mexico with Southwest Cheese, its successful joint venture with the Greater Southwest Agency.

This model reduces the amount of equity investment required by Glanbia while it secures a large supply of whey for its highly profitable performance nutrition business where it owns brands such as Optimum Nutrition and BSN.

This investment is part of Glanbia’s broader strategy to secure access to cheese and whey production over the medium to long term. Glanbia has already expanded whey capacity in Idaho and is expanding its Southwest Cheese capacity over the coming year.

Top producer

This joint venture will build on Glanbia’s position as the number one producer of American-style cheddar cheese. While no financial details were disclosed, it is understood that it could cost approximately $400m (€372m). The new plant will be funded through a mix of equity investment from the partners and financing through the joint venture vehicle.