Friday, March 29, 2024

Russia also driving demand

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Russia is regarded as a very important player in the global dairy scene by Fonterra but as yet there are no plans to make further investments.
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Chief executive, Theo Spierings, told the half year results announcement that the co-op looked at Russia “as a prospect”. But there were no plans to make further investments there because it was difficult to bring products to that market which fitted with the New Zealand mix of offerings.

Spierings said that on a recent visit to Russia he visited a small strategic player with whom NZ had a relationship, but nothing further had happened.

“It’s the same approach as in other markets,” he said.

If Russia became a strategic trade partner, if a free trade agreement was reached, Fonterra would look at customising products more suited to its needs.

Demand was being driven internationally by China and Russia although NZ had only a 2% share of imports of milk products into the latter country.

Spierings said the co-op’s China operations were going very well. The Anchor and Anmum brands had been launched, Fonterra’s farms there were performing well and fresh milk prices were some of the highest in the world. Its aim was to have a one billion litre milk pool in that country by 2020, but until that level was reached exports from NZ would fill the gap.

In answer to a question from a Chinese journalist about the co-op’s commitment to that market he said it was “very long term, forever”.

In Latin America a new distribution centre had been built in Chile in line with the co-op’s policy of keeping up investment.

“We have told our businesses overseas they have to grow market share,” he said.

“If they don’t it will turn the wrong way.”

In Australia Fonterra was resetting its business and again had shown by recent acquisitions that it was there to stay.

“We’re on a transformation journey and you don’t do it overnight,” he said.

Brands had been reduced from 20 to four or five, relationships with suppliers were much better, it was building its food service business and was looking to increase exports.

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