Fonterra Suppliers Confident in Mainland Dairy Future

Lactalis' $4.2 billion buyout of Fonterra's consumer businesses in Oceania and around the world is "just a change on the shirts" for them says Fonterra Australia Suppliers Council chair Stuart Griffin.

In Australia, the renamed Fonterra business, Mainland Dairy, will continue to collect milk from Fonterra farmers and process at eight manufacturing sites across Victoria and Tasmania.

Mainland Dairy will become new owners of well-known Australian brands like Perfect Italiano, Mainland, Western Star, and Bega.

Griffin says, for farmers, the leadership team, field staff and service offerings will remain the same.

He told Dairy News that a change in milk processor "isn't all that unique".

"It's a change in branding but from the farmer's point of view, and what was important to the farmers, is that we see that same service offering from the Farm Source model.

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"We will see the same company-owned tankers driving up our driveways.

"We'll still be dealing with the same people and the same management structure. So, I would think, for a lot of people, there have been bigger changes before."

Griffin, who milks 500 cows in West Gippsland, Victoria, says his council sees the investment from Lactalis as an opportunity for growth.

"Like, where I am in Gippsland, we've got a high-spec powder plant that maybe hasn't been doing what it could do.

"Just because it was part of an ecosystem that had factories in New Zealand and Australia, and it was doing what it needed to do in that network.

"But we're hopeful that it can do a whole lot more and can bring investment to our region and a different market for our milk to go into.

"So, they're all things that we see as opportunities with a change of ownership."

Griffin accepts that Fonterra's decision to put its Oceania business on the market created a bit of uncertainty early on.

"We've got a lot clearer line of sight on that now, that it will be business as usual. Fonterra becomes Mainland, Lactalis Australia will remain as Lactalis Australia.

Mainland Dairy will become new owners of well-known Australian brands like Perfect Italiano, Mainland, Western Star, and Bega.

"That might change down the track, but in the short to medium term, it's business as usual."

Griffin also confirmed that the milk price agreement with Fonterra rolls over to Mainland Dairy.

The council will continue to advocate on milk price on behalf of the 460 farmers.

Griffin points out that it's Mainland's business to run and set the milk price that works for both the business and farmers.

Business As Usual

Fonterra's $4.2 billion sale of the Mainland Group to Lactalis is expected to clear final regulatory hurdles this month.

This will see 4200 employees involved in the integrated foodservice and ingredients businesses in Oceania and Sri Lanka; and the Middle East and Africa foodservice business, move over to Mainland Dairy. In Australia and New Zealand, the move will involve 2500 employees.

Fonterra Oceania director David Breckenridge, who will head Mainland Dairy's Oceania operations after the sale, says the leadership team, field staff and service offerings will remain the same.

"The transition for our Australian business, if you take all the corporate ownership changes out, there really isn't a lot of change other than changing the logos on shirts," he told Dairy News.

Fonterra Oceania managing director David Breckenridge will head Mainland Dairy's Oceania operations after the sale..

"We're not breaking it up in any way: we're simply changing the brand on the shirts from Fonterra to Mainland Dairy.

"So, everything from our factories, our brands, our team, other than the merchandise with Fonterra logo on it, remains the same."

Fonterra's presence in Australia will be limited. The co-op will retain access to a small number of customers.

Mainland Dairy will act as a distributor for Fonterra products into Australia.