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Fonterra eyeing further global growth

By Neil Merrett , 02-Jul-2008

After a busy period of expansion for Fonterra, the New Zealand-based dairy cooperative says it remains far from finished with its global consolidation plans as it looks to key markets such as Asia to target growth.

A spokesperson for the group told DairyReporter.com that the opening of a new research and development site in the US and the acquisition of Nestle's Australian yoghurt business reflects an ongoing strategy to improve its international presence.

 

 

 

Global goals

 

 

Fonterra, which operates in 140 countries worldwide, said that while it remains committed to driving low-cost sustainable production domestically, it is actively seeking new ventures and markets for its operations.

 

 

 

"On the demand side, there will be about 150 million tonnes of new dairy consumption in the next decade. About a third of this will come from China," stated the spokesperson. "This is one area of focus for us along with other major growth markets."

 

 

 

The comments come as the company, which is already one of the largest exporters of dairy ingredients, last month unveiled a number of acquisitions and investments to improve its global portfolio of ingredients and finished products.

 

 

 

Nestle buy

 

 

This strategy had included purchasing the yoghurt and dairy-based dessert operations of Nestle Australia to allow for the long-term manufacture of both companies' brands.

 

 

 

John Doumani, the managing director of Fonterra Australia said the deal would allow the group to claim a national presence within yoghurt country both for its own and Nestle's former brands.

 

 

 

"By acquiring Nestlé's yoghurt and dairy dessert business, it provides us with a national position and complements our existing portfolio where we hold leading national positions in cheese and spreads through our Mainland, Bega and Western Star brands," he stated.

 

 

 

US development

 

 

The company has also shaken up its American operations in a bid to improve cooperation with manufacturers and consumers in the country through its new headquarters in Chicago.

 

 

 

The development of the site, which opened last week, will act as both a headquarters and research centre for Fonterra-USA, with staff numbers expected to reach 80 people as the market develops, the company says.

 

 

 

According to Fonterra, more than half of the skim milk powder sold worldwide by the group was produced in the US last year.

 

 

 

To ensure further growth, innovation has been chosen as a key focus of the new site, where the company has also constructed an Application and Sensory Technical and Development Centre (CDC) to improve collaboration with consumers.

 

 

 

"The centre is designed to provide specific applications in support of Fonterra Innovation, working quickly and effectively with our customers," the group spokesperson stated.

 

 

 

"The technical team, along with sales and business development will, work closely alongside top consumer goods companies, providing solutions for their product needs using our US and New Zealand based ingredients."

 

 

Using modern technology, Fonterra claims that the site will allow for the development of ingredients and packaging materials specifically tailored for US tastes.

 

 

 

Types of product expected to come out of the site include nutrition beverages and bars, yoghurt, milk-derived drinks and infant and baby formulas, the company said.

 

 

 

Fonterra is one of the top six dairy companies in the world by turnover, and the world's leading exporter of dairy products, controlling about a third of international dairy trade.

 

 

 

It represents the interests of 11,000 New Zealand dairy farmers, who also act as shareholders in the group.