By Sector. Other Sectors. By Country. View All Industry Reports. Australia Company Profiles. Applying Industry Research Industry Classifications. Company Type: Public Company. What does Fonterra Co-operative Group Limited do? Ingredients - Operations comprise the manufacture and global marketing of dairy commodity and ingredient products, including trading dairy products on other manufacturers' behalf. Products include milk powders, proteins and fats as well as cheese and probiotics.
Consumer and Foodservice - This division consists of the production, marketing and sale of value-added retail dairy products and is divided further into the geographic regions of Oceania, Asia, Greater China, Latin America and China Farms. Purchase this report or a membership to unlock the full analysis of the capital intensity of this industry.
The industry consolidated further and by there were only 12 dairy companies. The brand is still sold today domestically and internationally by Fonterra. At the same time as expanding its overseas markets, new products were developed to improve returns to farmers.
New Zealand's competing dairy co-operatives were forced to work together for the first time when the Government transferred the Dairy Board's assets to them in By the end of , more than 95 percent of the industry was represented by two major companies - New Zealand Dairy Group and Kiwi Co-operative Dairies. Two smaller co-operatives, Westland and Tatua, held the remaining five percent. The merger was achieved in October of that year and a new company, Fonterra Co-operative Group Limited, was created.
In , the domestic milk and dairy products market in New Zealand was deregulated. By , the Dairy Board was 80 subsidiaries strong, making it the largest marketing network across the globe. The dairy industry continued to operate in a co-operative fashion--local dairy farmers owned portions of their processing plants and those plants owned part of the Dairy Board.
Success in the dairy industry was crucial to the overall health of the New Zealand economy. Dairy farmers remained heavily dependent on export trade, leaving them vulnerable to fluctuations in international economies, especially those in the United States and Asia. During the late s, industry leaders began to formulate a plan that, upon fruition, would secure New Zealand's place among the leading dairy exporters across the globe.
In order for the deal to go through, the New Zealand government needed to pass laws that allowed competition in its domestic market in order to quell anti-trust fears. The Commerce Commission would also have to approve the merger, 75 percent of the co-operative farmers would have to vote in favor of the deal, and NZDG and Kiwi would have to formulate an acceptable merger agreement.
While the benefits of the arrangement appeared to be cut and dry, the deal nearly collapsed several times due to the inability of NZDG and Kiwi to settle on the terms of the merger agreement. The ensuing negotiations proved to be hostile at times, and several leading executives, including Doug Leeder, the chairman of NZDG, resigned during the talks.
An agreement was finally reached between the companies, and shareholders voted on the deal on June 18, The three heads of the merging companies--John Roadley, Henry van der Heyden, and Greg Gent--argued in favor of the transaction in a letter to shareholders, asserting that passage of the merger was crucial to the advancement of the industry.
They claimed the fusion of the three businesses would provide many benefits that included increasing global competitiveness; keeping the assets of the NZDB in one piece so that New Zealand companies would not have to compete against each other in international markets; maintaining a profitable co-operative structure; and integrating both manufacturing and marketing businesses in a cost effective fashion.
In particular, management believed that the merger would point the New Zealand dairy industry in the right direction for future growth. Shareholders agreed and voted in favor of the union.
The new business group officially began operation in October Named Fonterra Co-operative Group Ltd. The Group's top exports included whole milk powder, cheese, skim milk powder, butter, casein, anhydrous milk fat, liquid milk and cream, buttermilk powder, prepared edible fat, and lactalbumin. Fonterra spent its first year working towards integration.
The company also made key partnerships to strengthen its foothold in the international marketplace. During , sales increased by nearly 59 percent. Fonterra's shareholders were not as fortunate as the company reported a loss due to falling prices and oversupply.
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