Nestlé & Fonterra Establish Dairy Partners America

Nestlé And Fonterra Establish Dairy Partners Americas

Fonterra Co-operative Group Ltd CEO Craig Norgate and Nestlé SA Executive Vice President Carlos Represas have formally established their companies’ alliance to set up Joint Ventures in the dairy business in North, Central and South America.

They signed the alliance agreement in Christchurch, New Zealand, on Monday.

The 50:50 alliance, for which a Memorandum of Understanding was announced in August, will initially have approximately 10,000 staff and first year turnover of approximately US$1.4 billion. It will be called Dairy Partners Americas.

Dairy Partners Americas will operate in all the countries in the Americas and will cover branded chilled products and liquid milk, ingredient milk powders and milk management.

It is governed by a joint supervisory board consisting of Mr Norgate and Mr Represas (co-chairmen), Fonterra Deputy CEO and NZMP Managing Director Chris Moller, NEW ZEALAND MILK Managing Director David Pilkington, Nestlé Senior Vice President Ajit Saran and Nestlé Vice President Urs Scholer. It will be managed by executives drawn on merit from Fonterra and Nestlé.

Mr Norgate and Mr Represas said immediate priorities for Dairy Partners Americas were Argentina, Brazil, Paraguay, Uruguay and Venezuela, and they expected Joint Ventures to be finalised for these markets in the next three months.

Mr Represas said that, for over half a century, Nestlé’s presence had led growth and development of the dairy industry and branded business, particularly in Latin America. “This alliance represents a major step towards continued progress of our dairy business into the future,” he said.

Mr Norgate said today’s agreement was a major step towards what would undoubtedly be New Zealand’s biggest-ever offshore commercial deal.

“We have made good progress on the alliance since the Memorandum of Understanding was announced in August and in the five months since Fonterra has formally been in business,” he said.

“Dairy Partners Americas is the largest of the initiatives Fonterra has been able to announce since our shareholders gave their support to our industry merger last year, and is entirely consistent with our strategy to work with the world’s leading dairy and food companies to profitably grow our business to earn the status of one of the world’s leading multinational dairy companies and a true national champion for New Zealand.

“In Nestlé, we have an outstanding partner with an unparalleled reputation in the food business. We have high expectations for Dairy Partners Americas in the world’s wealthiest and fastest-growing dairy markets. Our shareholders and New Zealanders share those expectations and we are determined to meet them.”

Fresh milk for Dairy Partners Americas’ Joint Ventures will be sourced in the Americas and dairy ingredients from New Zealand. Joint Venture companies will have access to the brands of both companies.

The establishment of Dairy Partners Americas has no impact on the relationship between Fonterra and Nestlé elsewhere in the world. Fonterra is discussing any impacts of the alliance with its existing partners in the Americas.

Nestlé is the world’s largest food company and the global leader in branded dairy products. Fonterra is the world’s largest exporter of dairy products. Last year, Fonterra had total turnover in the Americas of US$1.7 billion. The Americas represent 13 percent of the world’s population and 32 percent (US$13 trillion) of its GDP. The region’s dairy market is worth nearly US$100 billion a year.

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