Sector News

Fonterra signs deal with A2 Milk Company to source A2 milk

February 21, 2018
Food & Drink

Fonterra has announced a partnership with milk processor The A2 Milk Company (A2MC) to make A2 milk more available in New Zealand, Australia and parts of Asia.

Described as a “comprehensive strategic relationship”, it will link Fonterra’s global milk pool and supply chain, manufacturing capability and in-market sales and distribution capacity with A2MC’s brand strength.

As part of the partnership, Fonterra will now begin conversations with its farmers to source an A2 milk pool for A2MC products in New Zealand, which is intended to significantly expand over time to help meet the growing demand for A2MC products. A similar milk pool in Australia will also be developed.

The agreement will also see Fonterra exclusively supply nutritional milk powder products in both bulk and consumer packaged formats intended for sale in A2MC’s new priority markets across Southeast Asia and the Middle East. These products will be produced at Fonterra’s facilities in New Zealand as well as Fonterra’s nutritionals facility in Darnum, Victoria, Australia.

A New Zealand fresh milk license will see Fonterra hold an exclusive licensing arrangement for the production, distribution, sale and marketing of A2 Milk fresh milk for sale in New Zealand.

Earlier this year, A2 Milk announced it was expanding its product range into the US northeast, responding to increasing consumer demand for its easy-to-digest milk.

Announcing the deal, Fonterra CEO Theo Spierings and A2MC managing director and CEO Geoffrey Babidge said the partnership is designed to generate returns for both companies by growing demand in both local and international markets for products using A2MC’s brand strength and capabilities.

“The partnership is intended to fast-track market growth and this creates [an] opportunity for our farmers to create additional value from their milk,” said Mr Spierings. “Fonterra’s high-quality milk pools, our global supply chain, our manufacturing capabilities and knowledge, and our in-market sales and distribution expertise is being combined with A2MC’s brand strength to unlock new opportunities in a wide range of international markets. It is a win-win for both companies.

“We continue to see a strong future for dairy based on our existing range of products, including recent additions such as organic, low-lactose and high-protein milk choices that consumers seek out for a premium. The A2MC products promoted by this partnership sit well within our overall portfolio of products.

“Consumers like to have choices and the growth of A2MC branded nutritional powders and fresh milk sales in Australia, for example, shows the potential. This partnership is all about finding ways to continue to delight our consumers and generate more value for our farmers.”

Source: FoodBev

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