Fonterra and Future Consumer scale back India JV Future Dairy amid COVID-19 hardship

11 Mar 2022 --- Fonterra and Future Consumer will wind down its 50% joint venture (JV) in India, Fonterra Future Dairy Partners, established in 2018. The co-operative entered the JV as a capital-light way to test the Indian market, which has a large dairy-consuming population but restrictive trade access for New Zealand dairy.

“The last few years have been challenging for the JV with COVID-19 causing significant disruption to the Indian market,” says Judith Swales, CEO Asia Pacific.

Despite this, Future Dairy delivered some important initiatives, including the launch of the Dreamery brand, a range of consumer products made using Indian milk and distribution of New Zealand Anchor Food Professionals products for the foodservice sector.

Evolving daily nutrition ambitions
The JV was initially set up to help meet India’s growing demand for high-quality dairy nutrition while establishing Fonterra’s presence in India.

Market growth in the dairy sector in India is driven by a young population where 70% of people are below the age of 45. They are digital-savvy, live in urban areas, lead an active lifestyle, have more disposable income and want to consume higher quality and higher nutritional dairy products, Fonterra reported.Future Dairy launched a range of products made from Indian milk.

 “[This JV] will allow us to prepare the groundwork and make the most of our expertise as we enter the world’s largest and fastest-growing dairy industry,” Lukas Paravicini, chief operating officer, global consumer and foodservice Fonterra, said at the time. 

“Over the next seven years, consumer demand for dairy in India is set to increase by 82 billion liters – seven times the forecasted growth for China.”

Presence in Southeast Asia and India
Future Group is present in 26 of 31 Indian states with over 2,000 modern trade outlets,5,000 public distribution outlets and a nationwide cold-chain and ambient distribution network.

Initially, the partnership focused on product development and exploring new geographies. The first consumer products were launched in 2019, using locally sourced milk and dairy products from New Zealand.

“We will continue to have a presence in India through Anchor Food Professionals and our Ingredients business and will explore opportunities to grow access for our New Zealand milk as they come up,” says Swales.

In 2019, Fonterra intended to sell a portion of its stake in China-based Beingmate Baby & Child Food Company with a shareholding of 18.8%. The decision was part of Fonterra’s three-point plan to turn around the business.

Edited by Inga de Jong