The first two endeavours might have been abortive, but it seems that Fonterra might finally see success in its third, solo attempt to move into India.
Until 2009, the New Zealand-based dairy giant had partnered with Bangalore-based Britannia, but now Fonterra has announced plans to open an office in Delhi without a local partner. Hamish Gowans has been appointed to run the operation, which is expected to open in Delhi during the course of next year.
Fonterra parted ways with Britannia, when the latter acquired the Kiwi operation’s 49% stake in the joint-venture, and set out to build its business in the local market by signing with Indian Farmers Fertiliser Co-operative to set up a large dairy farm.
The Rs1,000 crore project for 40,000 high-yield cows, however, was scuppered after land authorities refused to grant approvals for the scheme.
Developing local knowledge
The new office will be Fonterra’s first as a single entity, and it is the first time the co-operative will have employed its own India-based staff.
The initial aim is for the new management to gain a better understanding of the local dairy market.
“India’s dairy industry is growing rapidly,” said Kelvin Wickham, president of Fonterra Greater China and India. “The annual dairy consumption is forecast to reach between 180m and 200m tonnes by the end of the decade, with more than 20m mouths to feed each year.”
According to Wickham, India produces one-sixth of the world’s milk, but almost all of this is consumed locally. “The country has a large, complex dairy industry and, while Fonterra has developed a strong knowledge of the country’s dairy environment, it is clear we need to have dedicated leadership on the ground to further strengthen relationships and develop opportunities.”
Tirumala deal denied
Earlier this month, New Zealand press reported Fonterra’s denial of speculation that it was involved in the bidding for the second-biggest supplier of milk in India’s southern states.
It was widely believed that Fonterra was going up against fellow global major Danone for a controlling stake in Hyderabad-based Tirumala Milk Products worth around US$450m. And although the Indian media was convinced that the two companies were going head-to-head for the purchase, a Fonterra spokesman called the claims “rubbish”.
Last year, Fonterra embarked on a plan to look at the feasibility of farming in India as part of a government-led drive to forge closer ties with the world's tenth biggest economy.
Since then, the dairy exporter has identified rapidly growing emerging markets as a strategic target, and has saddled India alongside China in a new management structure.