Fonterra and The a2 Milk Company enter strategic partnership
As part of the partnership, Fonterra will have an exclusive licensing arrangement for the production, distribution, sale, and marketing of a2 Milk for sale in
New Zealand, leveraging its fresh milk capabilities to establish distribution across the country.
“The partnership is intended to fast-track market growth, and this creates opportunity for our farmers to create additional value from their milk,” Fonterra CEO Theo Spierings said.
“It is a win-win for both companies.”
Spierings added that the companies share the same priority on producing premium milk products and that a2MC products promoted by the new partnership fit well within its overall portfolio.
“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,” he said.
“Consumers like to have choices, and the growth of a2MC branded nutritional powders and fresh milk sales in Australia, for example, shows the potential.”
Milk produced by a2MC now accounts for 10% of grocery fluid milk sales in Australia, according to the company.
Partnership specifics
With the partnership and under the Nutritional Products Manufacturing and Supply Agreement (NPMSA), Fonterra will begin conversations with its network of 10,000 farmers to source an A2 milk pool and develop a similar supply of A2 milk in Australia to meet rising demand for a2MC products.
Fonterra will also become the exclusive supplier of nutritional milk powder products in both bulk and consumer packaged formats intended for sale in a2MC’s targeted markets of South East Asia and the Middle East. These products will be produced at Fonterra’s facilities in New Zealand as well as Fonterra’s nutritionals facility, at Darnum in Victoria, Australia.
There will also be a period to explore a2MC brand butter and cheese, and China-source liquid milk to sell in Australia, New Zealand, and China. These products are not presently marketed by a2MC and would complement Fonterra’s existing dairy portfolio.
Discussion of a jointly-owned packaging facility is also being explored.
