Fonterra and A-Ware Food Group Form European Dairy Partnership

Under the agreement, A-ware Food Group will operate a new cheese plant and Fonterra will operate a dairy ingredients plant alongside this. Whey and lactose produced onsite will be processed into premium nutritional ingredients to supply Fonterra's customers throughout Europe and Asia.

30 May 2012 --- New Zealand-based Fonterra and the Netherlands-based A-ware Food Group announced that they had signed a Memorandum of Understanding to establish a new cheese and dairy ingredients factory in the Netherlands.

Under the agreement, A-ware Food Group will operate a new cheese plant and Fonterra will operate a dairy ingredients plant alongside this. Whey and lactose produced onsite will be processed into premium nutritional ingredients to supply Fonterra's customers throughout Europe and Asia.

Fonterra CEO Theo Spierings said the proposed investment fitted well with the strategic priorities of both companies.

"One of the key priorities identified in Fonterra's recent Strategy Refresh was to focus on nutrition for the vulnerable and to promote mobility among ageing populations globally," said Mr Spierings.

"We have substantial intellectual property in the manufacture of functional whey protein ingredients and have been looking for some time for a source of high quality whey to enable us to commercialise these innovations for our customers around the world.

"With our New Zealand Milk business driving hard to optimise returns, we are producing more milk powders in New Zealand and therefore need alternative sources of whey to meet growth requirements. We also need more lactose for our global ingredient business. This partnership will give us greater access to both."

Koert Liekelema, MD Fonterra Europe added: "With this investment we will secure a high quality whey source that allows for the manufacturing of premium whey protein ingredients at scale. Customer demand for these products is growing fast around the globe."

A-ware in The Netherlands is a significant provider of premium cheese in Europe with a strong history and network. A-ware is well placed to integrate the new cheese plant into its supply chain.

A-ware Food Group CEO Jan Anker said: “We are now set to take the next step in the manufacturing of cheese. This will help us to expand our service offering with increased flexibility for our growing customer base in Europe.

"As a family owned business, we aim to firmly anchor our business in the Dutch dairy industry and look forward to cooperating directly with Dutch dairy farmers in the future."

The two companies will now commence full due diligence on the proposal, with a view to concluding the transaction later this year.