Fonterra Sells Australian Ice Cream Business

Nestlé will acquire the Peters brand in Western Australia and the Connoisseur ice cream brand, while Bulla will acquire the license to manufacture and market the Cadbury ice cream range in Australia.

30/04/09 Fonterra announced it has signed binding agreements with both Nestlé Australia and Regal Cream Products (Bulla Dairy Foods) to sell its Australian ice cream business.

Nestlé will acquire the Peters brand in Western Australia and the Connoisseur ice cream brand, while Bulla will acquire the license to manufacture and market the Cadbury ice cream range in Australia.

Both agreements are conditional upon regulatory approval.

The Nestlé arrangements, which are expected to take effect on 29 June 2009, will see Nestlé integrate the production of the Peters and Connoisseur brands into its national ice cream business, with all manufacturing consolidated in its Mulgrave facility in Victoria.

Fonterra Australia New Zealand Managing Director, John Doumani, says this decision makes good business sense.

“Given Nestlé own the Peters brand in all states except Western Australia, they are the logical owners of the brand in Western Australia and the decision to sell the Peters brand to Nestlé ensures Peters remains a strong vital brand in Western Australia.

“Nestlé has the required scale, synergies and expertise to invest in both the Peters and Connoisseur brands to continue to position them as strong leadership brands in the ice cream category,” says Mr Doumani.

In conjunction with Nestlé’s acquisition, Fonterra has agreed to sell its remaining ice cream business in Western Australia to Bulla.

Bulla’s capability and expertise in ice cream will ensure the continued innovation and growth of Cadbury’s popular ice cream range in Australia.

The Bulla arrangements will eventually see Bulla producing the Cadbury ice cream brand in its Victorian facilities. In the interim, Fonterra’s Balcatta site in Western Australia will continue to produce this range.

As a result of the sale of its Australian ice cream brands, potentially up to 140 positions will be made redundant at Fonterra’s Balcatta site in Western Australia.

“We regret the impact these decisions will have on our people and we are doing everything possible to minimise the number of people affected by this announcement, including pursuing redeployment opportunities within Fonterra and employment opportunities with other companies.

“We have in place a comprehensive program to assist impacted employees, including outplacement support and counselling.

“The redundancies will be phased over a period of time; we have endeavoured to provide as much notice as possible to our people and will be as flexible as possible to meet individual needs,” says Mr Doumani.

Fonterra’s New Zealand ice cream business, Tip Top, and its remaining West Australian dairy business are unaffected by this announcement.

Separately, Fonterra has announced its intention to undertake a strategic review which will seek to maximise the value and sustainability of its non-core regional liquid milk businesses in Australia. Fonterra places a high value on these operations, however its primary focus is national leadership across Australia in its priority categories of cheese, spreads, yoghurts and dairy desserts.

Mr Doumani has assured Fonterra’s Western Australian farmer suppliers that today’s announcement has no impact on their milk supply arrangements.

“We collect over 130 million litres of milk in Western Australia annually and our growing Brownes brand portfolio will continue to require this secure supply of fresh high quality milk to produce its market leading, innovative products,” he says.