Fonterra, the Largest Dairy Cooperative, May Sell Its Consumer Goods Division
Source: The DairyNews
Fonterra Co-operative Group Ltd today announced a shift in its strategic direction. The company aims to strengthen its position as a leading global supplier of high-quality, innovative dairy ingredients. As part of this, the cooperative revealed that it is exploring options for the full or partial sale of its global consumer business and its integrated Fonterra Oceania and Fonterra Sri Lanka enterprises.
“We conducted a strategic review that reinforced the role of our core business. This involves working with farmers to ensure stable milk supply and efficient production of valued products, while also delivering high returns to our shareholder farmers and unit holders,” said Chairman Peter McBride.
“We believe we can further enhance the cooperative's value by focusing on becoming a B2B dairy supplier, working closely with clients through our high-quality ingredients and foodservice channels. In this context, we are exploring the sale of our global consumer business as well as our integrated companies Fonterra Oceania and Fonterra Sri Lanka,” commented CEO Miles Hurrell.
Fonterra’s consumer business includes a portfolio of leading market brands such as Anchor, Mainland, Kāpiti, Anlene, Anmum, Fernleaf, Western Star, Perfect Italiano, and others.
Fonterra Oceania is a fully integrated business, recently formed by merging Fonterra's brands in New Zealand and Australia. It includes consumer goods, foodservice, and ingredient production enterprises. Fonterra Sri Lanka encompasses consumer goods and foodservice production enterprises.
Together, the enterprises under consideration for sale accounted for about 15% of the cooperative's total dry milk production and about 19% of Fonterra’s operating profit in the first half of the 2024 financial year, with consumer businesses delivering high base profitability.
“The sale of these assets would help create a simpler and more efficient cooperative, focused on producing core ingredients and foodservice products and excelling at what we do best,” said Mr. Hurrell.
“Although these are excellent businesses showing strong performance and potential for further development, owning them is not essential for Fonterra's primary function of collecting, processing, and selling milk. We prioritize the production of ingredients and foodservice products,” Hurrell noted, emphasizing that attracting investment would benefit the consumer division.
As the next step, Fonterra will appoint advisors to assist in evaluating asset sale options.
“We recognize that selling assets of this scale would be significant for Fonterra. Throughout this process, we will consider how to best maximize overall returns for our farmer-shareholders and unit holders.
“The choices we make when considering sale options will depend on a clear understanding of the best way to create value for the cooperative – both in terms of potential sale revenue and Fonterra’s ability to achieve stable economic profits in the long term,” Hurrell added.
“We believe we can further enhance the cooperative's value by focusing on becoming a B2B dairy supplier, working closely with clients through our high-quality ingredients and foodservice channels. In this context, we are exploring the sale of our global consumer business as well as our integrated companies Fonterra Oceania and Fonterra Sri Lanka,” commented CEO Miles Hurrell.
Fonterra’s consumer business includes a portfolio of leading market brands such as Anchor, Mainland, Kāpiti, Anlene, Anmum, Fernleaf, Western Star, Perfect Italiano, and others.
Fonterra Oceania is a fully integrated business, recently formed by merging Fonterra's brands in New Zealand and Australia. It includes consumer goods, foodservice, and ingredient production enterprises. Fonterra Sri Lanka encompasses consumer goods and foodservice production enterprises.
Together, the enterprises under consideration for sale accounted for about 15% of the cooperative's total dry milk production and about 19% of Fonterra’s operating profit in the first half of the 2024 financial year, with consumer businesses delivering high base profitability.
“The sale of these assets would help create a simpler and more efficient cooperative, focused on producing core ingredients and foodservice products and excelling at what we do best,” said Mr. Hurrell.
“Although these are excellent businesses showing strong performance and potential for further development, owning them is not essential for Fonterra's primary function of collecting, processing, and selling milk. We prioritize the production of ingredients and foodservice products,” Hurrell noted, emphasizing that attracting investment would benefit the consumer division.
As the next step, Fonterra will appoint advisors to assist in evaluating asset sale options.
“We recognize that selling assets of this scale would be significant for Fonterra. Throughout this process, we will consider how to best maximize overall returns for our farmer-shareholders and unit holders.
“The choices we make when considering sale options will depend on a clear understanding of the best way to create value for the cooperative – both in terms of potential sale revenue and Fonterra’s ability to achieve stable economic profits in the long term,” Hurrell added.
