Fonterra provides details of Nestle dairy partnership

By Nick Stride

Thursday 28th March 2002

Dairy co-operative giant Fonterra this week fleshed out last August's announcement of a North and South American strategic joint venture with Nestle.

The venture, named Dairy Partners Americas, will have first year turnover of $US1.4 billion ($3.2 billion) and will boost Fonterra to the number one position in Latin America.

Fonterra also announced it was "on the ground" in the $50 billion Indian market with a joint venture between its New Zealand Milk subsidiary and India's Britannia Foods.

The formal establishment of Dairy Partners Americas will immediately open up a $300 million market for New Zealand dairy products in South America.

Fonterra becomes Nestle's preferred supplier in Brazil and Mexico and the two are also targeting Argentina, Venezuela, Uruguay, Paraguay, and Chile.

Regulatory approval had been applied for in each country.

Fonterra gains the right to use Nestle brands on its products throughout the Americas but tariff and trade issues remain to be overcome.

The US, for example, is considering a bill that will effectively impose tariffs on imports of New Zealand cheese.

The ventures are seen as positioning the partnership ahead of possible trade deals.

In India New Zealand Milk will not supply product but will make its research and development capabilities available to Britannia.

Existing Britannia products will be upgraded and new products are planned.

Britannia's major business is bakery but it has recently moved into dairy and has a strong distribution network.

The venture is targeting the $5.8 billion "formal" market, which is forecast to grow at around 9% a year.

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