Sugar hit
OPINION: Winston Peters has described the decision to sell its brand to Lactalis and disperse the profit to its farmer shareholders as a 'short sighted sugar hit'.
Everyone was keen to know more about the dairy giant's plans to divest its consumer business, which includes some of New Zealand's most iconic brands - Anchor, Mainland and Kapiti.
While Hurrell didn't reveal details about the phone conversations, chances are that he told the callers what he's been telling farmer shareholders and politicians - not a lot.
How the divestment plan unfolds will take 12-18 months to unfold. On the chopping block is the co-op's global Consumer business, as well as its integrated businesses Fonterra Oceania and Fonterra Sri Lanka, easily valued at a few billion dollars. By doing a U-turn, Fonterra wants to end up with almost no consumer brands, very similar to Tatua, which has a small consumer brands business selling whipped cream and cream cheese.
Fonterra claims it can add further value for the co-op by focusing on being a business-to-business (B2b) dairy nutrition provider, working closely with customers through its high-performing Ingredients and Foodservice channels.
On NZ dairy company is already implementing this strategy very well. Waikato's Tatua Dairy Co-op paid a record $12.30/kgMS to its 100 farmer shareholders last year and it did this by producing mostly specialised dairy ingredients. Fonterra shareholders received a milk price of $8.22/kgMS.
So, could Fonterra end up as a bigger version of Tatua? Hurrell says they haven't thought of it in that context.
He adds that Fonterra is keen to make its ingredients business even stronger.
"If that's a parallel that's been drawn, that would be a compliment to Tatua, they've got a nice business."
Fonterra shareholders would love their co-op to match Tatua in the payout stakes.
