The Hokitika-based subsidiary of China's Yili, Westland Milk, said it had bought Waikato dairy food manufacturer Canary Foods for an undisclosed sum.

Canary Foods, which was established in 2001, exports 75 per cent of the dairy products it manufactures.

The company produces "reworked" premium butter and cheese-based products such as butter sheets and medallions for use in the retail and food service sectors, including supermarkets, airlines, restaurants, and bakeries.

Westland chief executive Richard Wyeth said Canary acquisition was a "fantastic fit".

"After our $40 million investment in doubling our consumer butter manufacturing capacity at Hokitika, this extends our long-term commitment to add value to Westland's butter portfolio by playing a greater role in the expanding global consumer butter and spread market," he said.

He said Westland continued to go from strength to strength under Yili.

"The investment has helped us turn our performance across the entire company around and we're now in a very strong position to capitalise on that.''

Canary has developed a compostable, individually sized butter squeeze pack in response to consumer demands for ethically responsible packaging and global calls for an end to single-use plastics.

The company's executive director and shareholder James Gray said the acquisition by Westland would give Canary more opportunities for expansion and access to global markets.

"Canary grew off the back of taking outstanding New Zealand dairy products to the world by catering for the airline and hospitality industries,'' Gray said.

"We used the Covid pandemic as an opportunity to reassess our strategy and now, after record sales last year and with international travel and the hospitality sector set to take off, we are already in a strong position as these markets continue to bounce back."

Canary chairman and shareholder Jeremy Curragh said the relationship with Westland parent company Yili would give the company even greater access to international markets.

Under the deal, Canary Foods will become a subsidiary of Westland Milk Products, retaining its own brands and third-party manufacturing agreements.