What Would Synlait Be Worth to Fonterra or a2 Milk?
Speculation of a possible joint move by Fonterra and a2 Milk to buy Synlait raises a much bigger strategic question, says agribusiness expert Dr Nic Lees.
The facility is on the same site as the Dairy Partners Americas' Araras factory which makes a variety of chilled dairy products including yoghurts, desserts and cream cheese. More than 200,000 metric tonnes of dairy products, destined for delivery across Brazil, are expected to pass through the distribution centre per year.
Combining the production and cooling site with the distribution facility will offer considerable energy savings, reducing the amount of diesel required for transport by about 150,000 litres and saving 400 tonnes of carbon dioxide per year.
Fonterra chief executive Theo Spierings, who was present at the opening of the centre, says Brazil is an important market for Fonterra. "Rapid urban growth and a focus on healthy nutrition are driving demand for dairy products and we continue to invest significantly in the region through our partnership with Nestle and by developing selected milk pools," he says.
"The new centre enables us to lower distribution costs and move product quickly across the country. And it is leading the way in sustainability using efficient systems, reducing gas emissions and waste, and increasing recycling and the safety of our people."
Fonterra's Latin American footprint drives over 900,000 metric tonnes of volume per year and $3.4 billion (NZD) in revenue from consumer dairy, foodservice and high value ingredients. As well as extending Fonterra's business portfolio, the DPA partnership also enables the cooperative to work with dairy farms in the region to improve milk quality, safety and sustainability.
Dairy Partners Americas
Set up in 2003, Dairy Partners Americas is the largest dairy company in South America, purchasing and processing some two billion litres of milk each year in Brazil alone.
DPA produces ingredients and consumer products with strong brands in the liquid and chilled dairy market throughout Latin America.
The alliance incorporates two businesses: A consumer chilled and liquid products business and a milk procurement and milk powder and ingredients manufacturing business.
Fonterra licences brands and provides its large-scale milk procurement, product development, and manufacturing and processing expertise, as well as technical services and certain technology to the alliance.
Nestlé licences brands and provides its product development, manufacturing and processing expertise, as well as distribution infrastructure to the alliance. DPA operates eight factories in the country and provides employment for 2,600 people.
