What is Westland Milk Products - the supplier of Costco’s low price butter?

Thursday, 22 May 2025

Butter at the wholesaler was $9.99 per kilo and Auckland shoppers were making the most of it.

As butter prices surge at the supermarket, shoppers at Costco in far west Auckland have been bulk buying packs costing just $9.99 per kilo.

The butter is sold under Costco’s private label brand Kirkland Signature, and comes from Hokitika-based Westland Milk Products, which provides the butter for Costco stores in several countries, not just here.

Stuff has approached Costco and Westland for comment on the relatively low price of the Kirkland butter, but neither company was forthcoming.

Westland said on its website it had about 400 farmer suppliers, who were guaranteed to be paid at least the same for their milk as Fonterra paid its farmers.

Even better for the Westland suppliers, for the 2024/25 and 2025/26 seasons they’re being paid a 10c premium above the Fonterra price.

So, what is Westland Milk Products?

Previously known as the Westland Co-operative Dairy Co, it was formed in 1937, and was based in Hokitika, with a sizeable operation, including warehouse in Rolleston.

Promotional material said the company provided more than 1500 jobs - although that figure included farmers and their workers - and generated more than 14% of the West Coast’s GDP.

Christopher Luxon in October 2023, shortly before he became prime minister, at Westland Milk Products’ plant in Hokitika.

It ceased to be a co-op in 2019, when the shareholder farmers were bought out by the Yili Group of China.

When it made its bid, Yili was described as the largest dairy producer in China and Asia, with a strategy to grow both its domestic and global business.

According to the Rabobank Global Dairy Top 20 report for 2024, Yili was the fifth-highest ranked company in the world for dairy turnover in 2023. Fonterra was sixth.

Yili is headquartered in the city of Hohhot, the capital of Inner Mongolia.

Westland Milk Products makes the Westgold brand of butter

Westland wasn’t Yili’s first foray into this country. In 2013 Yili bought Oceania Dairy in South Canterbury and has since invested heavily in the business.

Why did the Westland farmers decide to sell to Yili in 2019?

Yili offered them $3.41 a share, valuing Westland at $588 million.

As then co-op chairman Pete Morrison pointed out that was “significantly higher” than an independent adviser’s valuation range, which had been between $0.88 and $1.38.

It was also more than double the $1.50 the co-operative shares had traded at for years.

Supplier farmers received an average of about $500,000 for their shares.

The deal also included the 10-year guarantee - since extended - to match the price Fonterra pays for milk.

Buyers have been scooping up boxes and boxes of the Westland-made Kirkland butter at Costco in west Auckland.

The bid from Yili was a result of a process carried out by the co-op board following Westland’s inability to deliver a competitive milk payout for some years before 2019.

The proposal was supported by 94% of the Westland farmer shareholders.

What brands does Westland Milk Products sell?

Despite the frenzied buying of the Costco butter, the butter brand highlighted on Westland’s website is Westgold, which also has UHT milk and UHT cream.

In fact, Westgold has its own website that shows products such as spreadable butter, and butter infused with garlic and parsley, and with herbs and black pepper.

Westland also makes the Westpro milk ingredients range, which includes milk powders, proteins, and bioactives.

How has Westland been going since it was bought by Yili?

The media releases suggest business has been good in recent years.

A release in late 2022 reported the launch of Westgold butter into the US market through Walmart stores. That followed a $40 million investment in a butter manufacturing plant in Hokitika, which had enabled Westland to double its consumer butter production.

In 2022, the company had annual revenue of more than $1 billion for the first time, up 27% from a year earlier. Westland also reported a profit that year of $39m, which was said to be a $120m turnaround from 2021.

The biggest contributor to increasing revenue was said to be a high-value product strategy and to some extent high global commodity prices.

In 2023, Westland announced $70m was being spent on a plant at Hokitika to boost the company’s production of the milk protein lactoferrin.

Yili Group, which owns Westland Milk Products, has its headquarters in Hohhot in Inner Mongolia. The location of the city is indicated here by the red marker.

In 2023 revenue edged up, while after-tax profit rose to $55.9m, despite a fall in global dairy prices.

A release from the company said Yili’s support had enabled Westland to invest heavily in infrastructure that would maximise revenue from high-value products.

That release - in April 2024 - said Costco’s Kirkland butter sales were up more than 160% from a year earlier and continuing to show strong growth.

So, do they like our butter over there?

In an article just a few months ago, Vermont-based Devon O’Brien, senior editor at the influential Allrecipes website, recounted her discovery of the Kirkland butter at Costco in the US.

Admittedly, the biggest difference she could find between the Kirkland butter and Ireland’s Kerrygold, which she had bought up until then, was the price.

Kirkland was several dollars cheaper, O’Brien wrote, but it also tasted better and had an even deeper golden colour.