Tuesday, 21 May 2024 11:55

Fonterra to offload iconic brands

Written by  Sudesh Kissun
Fonterra chair Peter McBride. Fonterra chair Peter McBride.

Fonterra says the sale of its global consumer business and its Oceania and Sri Lankan operations could take 18 months to complete.

Businesses on the chopping block used 15% of the co-operative's total milksolids and represented 19% of the group operating earnings in the first half of FY24. It also includes Fonterra's iconic Anchor, Mainland and brands. The co-op says it will seek farmer shareholer support for the sale.

Fonterra chairman Peter McBride says this is a significant move for the co-op which will set it up to grow long-term value for farmer shareholders and unit holders.

"We have conducted a strategic review which has reinforced the role of our core business. This is working alongside farmers to collect a sustainable supply of milk and efficiency manufacture products valued by customers, to deliver strong returns to farmer shareholders and unit holders," says McBride.

Chief executive Miles Hurrell says the review has also given the co-op confidence in the role it plays in the dairy nutrition value chain, with one of its greatest strengths being the production of world-class, innovative ingredients for customers to take to consumers.

"We believe we can grow further value for the co-op by focusing on being a B2B dairy nutrition provider, working closely with customers through out high-performing Ingredients and Foodservice channels.

"This will be enabled by strong relationships with farmers, a flexible manufacturing and supply chain footprint, deeper partnerships with strategic ingredients customers, further investment in our Foodservice channel, continued delivery on our sustainability commitments and investment in innovation.

"In this context, we are exploring divestment options for our global Consumer business as well as our integrated businesses Fonterra Oceania and Fonterra Sri Lanka," says Hurrell.

Fonterra's global Consumer business has grown over the years since Fonterra was formed and is performing well. It includes a portfolio of market leading brands such as Anchor, Mainland, Kāpiti, Anlene, Anmum, Fernleaf, Western Star, Perfect Italiano and others.

Fonterra Oceania is a fully integrated business, recently created through merging Fonterra Brands New Zealand and Fonterra Australia. It comprises Consumer, Foodservice and Ingredients businesses. Fonterra Sri Lanka comprises Consumer and Foodservice businesses.

Hurrell says selling these assets would help create a simpler, higher performing co-op focused on its core Ingredients and Foodservice business and "doing what we do best".

"While these are great businesses with recent strengthening in performance and potential for more, ownership of these businesses is not required to fulfil Fonterra's core function of collecting, processing and selling milk.

"Due to our co-operative structure, we believe prioritising our Ingredients and Foodservice channels and releasing capital in our Consumer and associated businesses would generate more value."

He says Fonterra also received "unsolicited interet in parts of these businesses, making now a good time to consider their ownership".

More like this

Fonterra trims board size

Fonterra’s board has been reduced to nine - comprising six farmer-elected and three appointed directors.

Returns 'not good enough'

Fonterra leaders are making their case for offloading the co-operative's $3 billion consumer business, noting that its return on capital has been nowhere near respectable.

Record milk price!

A record farmgate milk price for Fonterra shareholders is all but confirmed for this season.

Chinese strategy

OPINION: Fonterra may have sold its dairy farms in China but the appetite for collaboration with the country remains strong.

Featured

Massey Research Field Day attracts huge interest

More than 200 people turned out on Thursday, November 21 to see what progress has been made on one of NZ's biggest and most comprehensive agriculture research programmes on regenerative agriculture.

Expo set to wow again

Stellar speakers, top-notch trade sites, innovation, technology and connections are all on offer at the 2025 East Coast Farming Expo being once again hosted in Wairoa in February.

A year of global challenges

As a guest of the Italian Trade Association, Rural News Group Machinery Editor Mark Daniel took the opportunity to make an early November dash to Bologna to the 46th EIMA exhibition.

National

Winter grazing warning

Every time people from overseas see photographs of cows up to their hocks in mud it's bad for New Zealand.

ANZ defends farm lending rates

The country's largest lender to the agriculture sector says it's not favouring home loans over farm and business lending.

Machinery & Products

Expo set to wow again

Stellar speakers, top-notch trade sites, innovation, technology and connections are all on offer at the 2025 East Coast Farming Expo…

A year of global challenges

As a guest of the Italian Trade Association, Rural News Group Machinery Editor Mark Daniel took the opportunity to make…

» Latest Print Issues Online

The Hound

Review SOEs!

OPINION: NIWA has long weathered complaints about alleged stifling of competition in forecasting, and more recently, claims of lack of…

Bank reset

OPINION: Adding to calls to get banks to 'back off', NZ Agri Brokers director Andrew Laming has revealed that the…

» Connect with Rural News

» eNewsletter

Subscribe to our weekly newsletter