Fonterra unveils plans to merge New Zealand, Australia businesses to form Fonterra Oceania

NEW ZEALAND – New Zealand dairy co-operative Fonterra has disclosed its plans to merge its business units in New Zealand and Australia, bringing Fonterra Brands New Zealand (FBNZ) and Fonterra Australia together under the banner of Fonterra Oceania.

The merger, set to take effect on May 1st, aims to bolster the co-operative’s position in the competitive trans-Tasman marketplace.

Miles Hurrell, Fonterra’s CEO, emphasized that the integration would enhance the trans-Tasman offering in response to the intensifying competition.

He revealed that Fonterra Oceania is poised to consolidate its presence with a diverse portfolio, encompassing consumer and foodservice brands such as Mainland, Anchor, Kāpiti, Western Star, Perfect Italiano, and Australian Dairies.

FBNZ’s iconic brands, including Mainland, Anchor, and Kāpiti, known for producing milk, butter, specialty cheese, and yogurt, will continue to source their milk from New Zealand farmers.

The merger aims to leverage synergies and streamline operations across both countries.

René Dedoncker, Fonterra Australia’s current managing director, has been appointed to lead the newly formed Fonterra Oceania unit.

Dedoncker, with a tenure at Fonterra Australia dating back to 2005 and serving as managing director since 2017, brings extensive experience to the role.

While Fonterra Oceania aims to strengthen its market presence, questions have been raised about the impact on FBNZ’s other brands, including Fresh ‘n Fruity and De Winkel.

Fonterra has yet to confirm whether these brands will also continue to be produced using locally sourced milk.

Fonterra, recognized as the world’s largest dairy exporter, reported its Q1 full-year 2024 results last December.

Despite a 12% drop in revenue to NZ$5.1 billion (US$3.1 billion), the co-operative experienced a 19.7% increase in gross profit and a 45.6% surge in EBIT. Sales volumes, however, dipped by 9.3%, totaling 794,000 metric tons of milk for the quarter.

In addition to its financial performance, Fonterra has been actively addressing sustainability concerns. In November, the co-operative announced a new on-farm emissions target, a climate roadmap, and a voluntary climate-related disclosure report.

By 2030, Fonterra aims to achieve a 30% intensity reduction in farm-based emissions from its 2018 baseline.

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