Dairy Crest is set to invest £40 million in its Davidstow creamery, in a move which will create new jobs and see it tap into the booming baby food market.
The dairy giant revealed its plans for the huge investment in its Westcountry plant, as latest figures reveal how sales of its Cathedral City cheddar are on the rise and outperforming the rest of the market.
The massive investment at Davidstow will see Dairy Crest acquire plant and equipment that will enable it to demineralise whey produced as a by-product of its cheese-making processes.
The demineralised and dried product is a key ingredient in baby foods and, said spokesman Arthur Reeves, Dairy Crest would look to partner with an existing manufacturer to supply the whey powder to.
Dairy Crest described the baby-food industry as a rapidly growing market with "significant potential."
Mr Reeves told the Western Morning News that the company would reveal more details about the investment in September, but that the investment was likely to be completed within 18 months of its launch.
He added it would lead to the creation of more jobs within Davidstow's 114-strong workforce.
Chief executive Mark Allen said: "We are making good progress with new projects to increase the returns we get from whey and move into other added value products."
Dairy Crest already dries the whey that results from its processes, which, with a full mineral content, is sold on to chocolate and other food manufacturers.
It said that the move into the baby-milk market would generate "attractive returns" for its shareholders.
Mr Reeves said that the main focus of the Davidstow Creamery would continue to be upon the production of Cathedral City, however, explaining: "The size of what we do depends upon the amount of cheese we sell."
Dairy Crest's results for the first quarter of its current financial year reflect how Cathedral City is going from strength to strength.
Along with its Clover Spread, the cheese brand's sales have increased in a "tough" consumer market, while Dairy Crest's two other key brands, Country Life butter and Country Life Spreadable saw sales fall and flat-line respectively, compared to the same period a year ago.
The four products make up Dairy Crest's leading brands, which, combined, recorded sales 4% lower than compared to the same period in 2012.
Dairy Crest said its focus was upon the profitability of its key brands and its dairies business, adding that cost reduction also remained "key" to its success.
It is currently in consultations with employees over a proposal to sell its depot-based milk delivery business in North West England in a move likely to be completed later this month.
Dairy Crest, which has renewed an annual contract to supply liquid milk to Lidl, has said it is on target to reduce its costs by £20 million this year.
Mr Allen added: "We are pleased with our start to the financial year and despite the challenging environment we are trading in line with our expectations.
"All three of our product categories, cheese, spreads and dairies, are well positioned to generate medium-term growth."
Dairy Crest is holding its annual general meeting in London, today.