The company has been working closely with suppliers Walker Datavision (WDV) to develop the label, which increases the firm's environmental credentials.
"In the past, we used thermal transfer paper labels," said Fonterra's national eco-efficiency programme manager, Spring Humpheys.
"However, we couldn't put them through the same recycling process we use for the film; in fact if a label did go through it caused a chemical reaction that made the end product unusable. WDV, with whom we have a well-established relationship, carried out a battery of tests in order to develop a label that is both recyclable and works well from a printing perspective, and they have come up with a material that fits our needs perfectly."
Fonterra's eco-efficiency programme has now been running just over a year, and the company claims to have clocked up a number of successes, including a 75 per cent reduction in waste to landfill over twelve months at the company's Maungaturoto, New Zealand operation, which led to it being awarded a Northland Regional Council Slash-Trash award.
New Zealand dumps about one tonne per person of solid waste every year in landfills - about 3.6 million tonnes. The New Zeand Climate Change Office argues that around 65 per cent of this rubbish could be recycled or composted instead.
In addition, landfill gas emissions make up 4 per cent of New Zealand's total methane emissions. The Government has made a commitment to reduce greenhouse gas emissions and has accounted for a reduction from the waste sector in the climate change policy package.
If reductions are not made, New Zealand could restrict its ability to meet its obligations under the Kyoto Protocol.
Within the European Union as well, more and more companies are being forced to adopt more environmentally friendly means of production, especially in environmentally sensitive markets such as Germany. Fonterra's latest innovation shows that environmental considerations are now being taken into account up and down the entire supply chain in every global market.
Food packaging recycling is becoming a growing concern as food manufacturers look at ways of achieving efficient waste management. According to the UK's Environment Agency, the food and drink sector produces between seven and eight million tonnes of waste per year, second only to the construction industry. Food processors must now abide by amended laws that will see less scope for waste in the industry.
To complicate this issue further, landfill operations in UK are currently going through something of a revolution. There is a drive to take organic waste out of landfill, largely because 25 per cent of methane emissions - a major factor in global warming - come from landfill.
This change in waste management is having a knock-on effect on the food production industry. Although commercial landfills are not covered, there are now targets in municipal landfills to reduce organic matter. This means there is less space for waste coming from food processing operations, which is also affecting the packaging industry.
There is a growing move away from the use of plastic and towards starch and other biodegradable materials. But with organic matter being taken out of landfill in the UK, both the food processing and packaging industries need to think carefully about waste management.