A company developing a non-dairy form of milk said it is motivated by animal welfare and environmental concerns, and is not targeting the New Zealand dairy industry.
Muufri, based in California, has received start-up money to develop the milk from yeast which is intended to be indistinguishable from cows' milk.
According to the company its milk formulated from yeast contains the same proteins, fats and vitamins as dairy but with lower cholesterol.
Muufri co-founder Ryan Pandya said the company hopes to be able to present the product to its financial backers by September.
Mr Pandya said it could then take two or three years to refine and mass-produce the milk.
He said the yeast milk is intended to compete with industrial milk produced in North America by cows kept in factory farms.
Fonterra on Saturday said it does not see the emergence of a new non-dairy milk product as a serious threat to New Zealand's dairy industry.
But Fonterra director of Research, Science and Technology Jeremy Hill said it would be extremely difficult for Muufri to duplicate the nutritional value of milk sourced from animals.
He said it would require genetic modification and even then it was unlikely that artificial milk could match dairy.
