Reference no: EM131810642

Synlait Milk is an innovative dairy processing company that has experienced remarkable growth in a tough dairying environment. Since beginning manufacturing operations in 2008 Synlait Milk based in mid-Canterbury has grown its revenue to $759 million, its supply base to more than 200 farms and its staff to more than 550 people. Synlait Milk has performed very well on the back of global demand for safe, reliable, protein-rich foods. The company processes more than 700 litres of milk a year to produce a range of infant and adult nutritional milk products that it exports to more than 40 countries (Synlait, n.d.).

Synlait was created by dairy farmers Barry Dingle and Juliet MacLean in partnership with John Penno, a senior scientist at Dexcel, the dairy industry’s research centre. Rather than supplying skimmed milk powder to Fonterra the trio were looking for ways to increase the value of the milk they produced. In particular, they were keen to develop innovative added-value milk products. Their vision was to build Synlait into a “major supplier of high-value, hightechnology ‘milk components’ to food producers worldwide.” (Oram, 2006).

Synlait began in 2000 as a corporate farming business with the purchase of Robindale farm, one of the largest farms in New Zealand. By 2005 Synlait owned eight farms and in 2006 the decision was made to establish a manufacturing plant to produce innovative milk products. A growing customer base and considerable resources in milk powder production resulted in early growth for the company. As Synlait moved beyond ingredients manufacture to becoming a significant global supplier of infant nutritional products, Bright Dairy of China became a significant shareholder in 2010 (NZ Herald, 2010). Read ‘Our History’ for more details.

To date Synlait’s strategy has focused exclusively on manufacture by selling select products to leading global food companies that own strong brands (Skellern, 2016). Alongside world-class processing facilities, Synlait Milk has established strong relationships with key players across the entire value chain including milk suppliers, market distributers and key customers, such as A2 Milk Company. Two key planks of Synlait’s strategy are its differentiated milk supply and its manufacturing excellence. Firstly, Synlait differentiates its product at the production stage through breeding and feeding technologies. This enables it to produce products that satisfy individual customer requirements. Secondly, Synlait’s specialist manufacturing facility allows flexibility to meet a range of individual customer specifications.

Synlait listed in 2013 on the NZ stock exchange (Berry, 2013) and has experienced impressive growth, recording a net profit after tax of $38.2 million in 2017 up from 34.4 million in 2016. Synlait won the Deloitte Top 200 Best growth strategy for 2016. In 2016 Synlait announced plans to raise $98 million for a $300m expansion programme over the next three years including increasing its infant formula manufacturing and expanding manufacturing facilities with a second site (Cronshaw, 2016).

Explain the different strategic directions available for Synlait Milk using the Ansoff matrix. What should the future strategy be? Justify your recommendations.