Battle for milk
OPINION: Fonterra may be on the verge of selling its consumer business in New Zealand, but the co-operative is not keen on giving any ground to its competitors in the country.
Fonterra Shareholders Council chairman Ian Brown says the partnership with Beingmate is an important step to increasing access to the high value Chinese nutritional powders market and, in doing so, generating greater profit and returns for Fonterra Farmers.
"China is our number one market and demand for our products continues to grow there.
"Having recently visited the China market it's difficult to overstate the importance of having a local presence and with Beingmate's established networks and relationships this joint venture will enable us to move further towards consumer products that add margin over the value of milk.
"The announcements provide our co-op the opportunity to extract maximum value from every drop of milk we produce through the best use of our global assets."
Fonterra is teaming up with leading Chinese infant food manufacturer Beingmate intend to form a global partnership that will help meet China's growing demand for infant formula.
The partnership will create a fully integrated global supply chain from the farm gate direct to China's consumers, using Fonterra's milk pools and manufacturing sites in New Zealand, Australia, and Europe; the partnership is intended to increase the volume and value of Fonterra's ingredients and branded products exported to China.
It will be achieved in two phases: Fonterra will shortly start the process to issue a partial tender offer to gain up to a 20% stake in Beingmate; after gaining regulatory approvals and Fonterra satisfactorily completing the partial tender offer, Fonterra and Beingmate will set up a joint venture to purchase Fonterra's Darnum plant in Australia and will establish a distribution agreement to sell Fonterra's Anmum brand in China.
Fonterra chief executive Theo Spierings says the partnership between two leading dairy nutrition companies will be a game changer that will provide a direct line into the infant formula market in China, which is the biggest growth story in paediatric nutrition in the world.
The partnership will also play a part in promoting leading product quality and safety standards in the infant formula market in China, participating in the ongoing development of the Chinese dairy industry, and supporting the development of Beingmate's business.
"By working together with Beingmate, we will strengthen our infant formula brand presence in China and link China to high quality ingredients from New Zealand, high value paediatric products made at Darnum in Australia, and whey specialty ingredients manufactured at our new plant in Heerenveen in the Netherlands and in alliance with Dairy Crest in the United Kingdom," says Spierings.
"We will also work with Beingmate to evaluate mutual investments in dairy farms in China."
