Fonterra has invested $40 million into its Tīrau factory to help turn milk into more profitable products like lactose.
The co-op's Tīrau site has previously produced ethanol from whey for bio-fuels but will now be able to switch to making whey permeate for lactose which is more profitable than ethanol.
During the dairy season peak in the Waikato, the co-op's Tīrau site processes up to 2 million litres of milk every day.
Fonterra's central North Island general manager Tony Maclean says the investment was "a massive effort" made possible through a cross-functional team from across Fonterra, as well as external partners.
"This is a positive step forward in our long-term strategy. The significant investment in the Tīrau site demonstrates the importance of the site in the North Island."