Abbott Labs to build dairy farms in China
Abbott Laboratories is getting into the dairy farming business.
The Lake County medical products giant said Thursday it has partnered with New Zealand-based Fonterra Co-Operative Group Ltd. to develop up to five diary farms with more than 16,000 dairy cows in China. The two companies signed an agreement to spend about $300 million to build the farms, which could produce about 42.3 million gallons of milk a year.
The Chinese market is important for Abbott and its infant formula business, which include brands like Similac. The segment was battered last year after it pulled some of its products off Asian shelves when Fonterra warned that some of its whey protein contained a dangerous bacteria that could cause botulism. While the warning turned out to be a false alarm, Abbott's reputation and sales took a substantial hit, eroding worldwide sales growth by about 1.5 percentage points.
Building its own dairy facilities in partnership with Fonterra will help ensure the company has access to high-quality milk and more control over its distribution. Abbott also is building an infant formula plant near Shanghai that's expected to open in mid-2015.
Pending approval by Chinese regulators, the first firm is expected to begin producing in the first half of 2017. The location has yet to be named.
pfrost@tribune.com
Twitter: @peterfrost
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