Taking over the dairy

Fonterra has bought Nestle’s yoghurt and dairy business in Australia for an undisclosed sum.

The deal includes the rights for 28 years to manufacture, market and sell Nestle’s brands under licence.

The acquisition includes Nestle’s Echuca factory in Victoria and brands Nestle Diet and All Natural yoghurts, Milo Mousse, Blissful and Munch Bunch.

Fonterra said it would be the third largest player in that segment with a 16% market share when combined with existing brands of Brownes Fresh n’ Fruity yoghurt and CalciYum dairy dessert.

Fonterra has also bought itself a small advantage in its campaign to take over the Sydney-based Dairy Farmers cooperative.

Dairy Farmers currently sells Nestle’s Ski brand of yoghurts and dairy desserts, but its long-term licence to manufacture, market and sell the Nestle desserts will revert to Nestle in 2012.

The deal announced today – to take effect on September 1, when Fonterra will take over Nestle’s factory at Echuca in northern Victoria – will mean those licences will then be licensed to Fonterra.

In effect, Fonterra has locked rivals competing for the Dairy Farmers company out of being able to continue its Ski branding.

Fonterra’s managing director in Australia, John Doumani, who runs the cooperative’s market on both sides of the Tasman, said the Ski purchase represented a significant step towards achieving the company’s growth strategy in Australia.

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