Why Fonterra accepted defeat in the dairy aisle
OPINION: Fonterra's sale of its consumer dairy business to Lactalis is a clear sign of the co-operative’s failure to compete in the branded consumer market.
The co-op has sold its Wagga Wagga plant and Riverina Fresh brand to Blue River Group.
Exclusive negotiations led to the two signing to a sale, subject to conditions but expected to be complete next month.
Fonterra Australia managing director René Dedoncker says the Wagga Wagga business is strong, with its award winning brand Riverina Fresh favoured by baristas but not core to the co-op's strategy in ingredients, consumer and foodservice business.
"Divesting the Wagga Wagga business follows the divestment of non-core assets, including our yoghurt and dairy desserts business, our Bega shares and our stake in Dairy Technical Services; it allows us to focus and put all our energy into our core businesses of ingredients, consumer and foodservice," says Dedoncker.
"Our Australian operations have particular ingredients strengths in cheese, whey and nutritionals, complemented by our consumer and foodservice businesses. These businesses and dairy foods are matched by our manufacturing footprint in Victoria and Tasmania."
All Fonterra's employees in the Wagga Wagga business have received job offers from Blue River Group.
The group's co-chief executive and founder Craig Shapiro says the decision to buy Riverina Fresh reflects the company's ethos of investing in businesses that generate economic returns, and equally achieve positive and measurable social or environmental outcomes.
"The acquisition of the Wagga Wagga dairy business and the Riverina Fresh brand provides Blue River Group with an opportunity to invest in the agricultural sector and the Riverina regional community," Shapiro said.
Riverina Fresh has made dairy products since 1922, gaining a reputation for high quality, award winning milk, sourced from about 20 dairy farms in the Riverina region.
Riverina Fresh milk is reckoned Australia's leading coffee milk, highly regarded by baristas and roasters.
"The business has a dedicated and committed workforce and provides significant regional employment opportunities," says Shapiro. "We look forward to building on the existing strong relationship with the local farming families and distributors who stand behind the Riverina Fresh brand."
Rob Collier will remain chief executive, responsible for the Wagga Wagga business.
"Blue River Group's investment in Riverina Fresh will help a niche brand flourish," says Collier.
