Great South's decade-long oat milk investment appears doomed
A plant-based alternative milk factory was initially planned for Southland, then it was revealed it was heading to Canterbury, and now it appears it won't happen at all.
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New Zealand Functional Foods is understood to have scrapped plans for a plant-based milk factory in Canterbury delivering a hammer blow to Great South’s ten-year-plus investment.
It is also a setback for Southland oat growers who Great South stated would have benefited significantly from the development of a “state of the art” oat milk factory in Canterbury.
Great South - Southland’s regional development agency - has worked for over 10 years towards the development of New Zealand’s first carbon neutral plant-based beverage factory.
It has poured a significant number of staff hours into the work.
Great South founded New Zealand Functional Foods [NZFF] in 2014 before Stephen Tindall’s investment company K One W One took a 51% percent shareholding in the company.
It was initially planned to develop the factory in Makarewa, on the outskirts of Invercargill.
The factory was tipped to create 100-plus jobs in Southland through the construction phase and 70-plus skilled jobs thereafter.
However last year NZFF confirmed that it would instead construct the factory in Canterbury, with the prospect of an overseas investor coming on board.
That move to Canterbury sparked outrage from some Great South shareholders given the work the regional development agency had poured into the project over a decade.
The Invercargill City Council and Southland District Council both have a 48% shareholding in Great South.
The ILT, Southland Business Chamber, Gore District Council, Mataura Licensing Trust, SIT, and Environment Southland are smaller shareholders.
Great South representatives stated Southland would still benefit from the factory being based in Canterbury.
Board chairperson Ian Collier said at the time: “This is still a great opportunity for Southland, with world-leading Southland-grown oats now able to be showcased on a much bigger platform.”
However, a year on and it is understood the planned plant-based milk factory has been halted altogether.
The Tribune put the following questions to Great South CEO Chami Abeysinghe:
Why is the planned alternative milk factory now not going ahead?
What will now happen to New Zealand Functional Foods, and in particular Great South's shares in the company?
Are you able to quantify how much Great South has invested into the project (including staffing hours) over the past decade?
What impact will this, and the Green Hydrogen project pause, have on the Beyond 2025 Southland Regional Long-term Plan?
Abeysinghe responded saying she had passed The Tribune’s request for comment on to New Zealand Functional Foods to respond, and “we’ll get back to you at our earliest”.
At the time of this article being published, late on Monday night, NZFF had not yet responded.
In 2022 the then Minister for Regional Development Stuart Nash visited Invercargill to announce a $6 million Government-backed loan for the plant-based milk factory project from the Regional Strategic Partnership Fund.
At that time, Nash said plant-based milk alternatives are a fast-growing segment of domestic and international consumer markets.
The oat milk work had been viewed as a key component of the Just Transition work in place to try to diversify Southland’s economy.
When the Beyond 2025 Southland Regional Long-Term Plan was revealed in June 2023 the document stated: “[New Zealand Functional Foods] had received strong intent from an inspiring global partner, that would see them take a majority shareholding, of what was to be a $60 million investment into Murihiku Southland, to a staggering $105 million world-leading facility”.
News of the oat milk work not coming to fruition comes a week after Meridian Energy announced it had paused the Southern Green Hydrogen project which was another key component of that Beyond 2025 Southland Regional Long-Term Plan.
In the words of Winston Churchill never has so much been done by so many and so much money been spent to achieve so little.
Surely now its time to boot the chairman of Great South into touch and get someone in the position who is genuinely interested in working for the people of Southland.
Great South has become an echo chamber where ideas bounce around but never come to rest and that has a lot to do with the people who should be acting on behalf of the funders who never seem to be able to understand the idea of outcome investing.
In the meantime someone should be considering whether this factory could be build with investment from the people of Southland. I for one would be prepared to invest into what has to be one of the best new industries to be talked about in the south for many years and I am sure many other people would love to get on board with something that brings economic growth to the south.
Flawed business plan from the start?