MEDIA RELEASE

October 31 2008

Auckland, New Zealand

Chicago, Illinois

Fonterra Opens Chicago Technical Centre

The world's largest dairy exporter, Fonterra Co-operative Group, has opened its new research and development centre - the Chicago Technical Centre (CTC) - in Chicago, Illinois, near the O'Hare International Airport.

Fonterra has invested US$2.4 million in the state-of-the-art facility, which applies New Zealand intellectual property and technology to the benefit of both the New Zealand and US dairy industries. Customers will be able to come in and physically see the processes and taste the products, as Fonterra's technical staff develop cheeses, yoghurt, paediatric formulas, beverages and bars.

"Our investment in the CTC reinforces Fonterra's commitment to the US dairy industry and to innovation," said Martin Bates, Fonterra USA's President and Chief Operating Officer. "Along with the move, earlier this year, of our corporate headquarters to Chicago, the CTC's location will allow more innovations to be tailored specifically to the needs of Fonterra's customers operating within the US and Canadian markets."

The CTC houses advanced processing equipment, a sample analysis lab and an ingredient supply site.

Keith Schafer, Fonterra USA's Vice President of Technical Development, said the 15 staff employed at the centre will assist Fonterra's customers, partners, and scientists in defining products using Fonterra specialty ingredients in formulating retail and food service products.

"The centre will allow Fonterra to work directly with our North American customers, which range from the five largest food companies to smaller, regional firms," said Mr Schafer. "Fonterra IP and technology will be demonstrated at the facility. Staff will also work with universities and outside laboratories, as needed, on customer projects."

Fonterra's functional dairy proteins are leading ingredients in several application areas.

Recent Fonterra launches in the North American market have been the PowerProtein(tm) range for improved bar functionality and flavour; clear clean flavoured whey-based beverage ingredients; speciality milk protein concentrates for both the cheese and yoghurt industries to improve yields and textures; and a number of hydrolysates for the paediatric nutrition area.

Just four months ago, Fonterra USA moved its North American headquarters from Camp Hill, Pennsylvania, to the Rosemont area (next to Chicago's O'Hare Airport.) Having both the office and the new CTC in the Chicago area will make it simpler, faster and more effective to commercialise scientific innovations derived from Fonterra's other research and development hubs in Palmerston North, Melbourne, and Hamburg.

Fonterra USA is a fully-owned subsidiary of the New Zealand-based dairy co-operative.

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