Saudi Arabian purchase to help Fonterra grow in Middle East

Posted by Isobel Drake on 21st December 2009

Fonterra last week announced that it has reached a final agreement to purchase the remaining 51% stake in Saudi New Zealand Milk products, a joint-venture dairy manufacturing facility with SADAFCO in Saudi Arabia.

The acquisition, worth around NZD45 million, is subject to regulatory approvals in Saudi Arabia.

Saudi New Zealand Milk Products (SNZMP) currently packs and processes over 30,000 metric tonnes of New Zealand milk a year for Fonterra and a small number of co-packing customers. The deal will see Fonterra take full ownership of the factory, securing its current manufacturing capacity requirements for Middle East, Africa (MEA) and Commonwealth of Independent States (CIS) region and allowing for further expansion and investment.

Mark Wilson, Regional Managing Director for Fonterra Asia/Africa and Middle East said the acquisition represents an important step in growing Fonterra’s business in a large and growing dairy market.

“We are building a sizeable business in 20 countries in this region which combined, account for 250 million people and a dairy market value of more than US$5 billion,” he advised. “It is critical that we have long-term access to manufacturing capacity near these markets, to support our growth.”

“While we are increasing our geographic footprint and sales volumes, we are also focusing on growing a portfolio of added value products, such as speciality creams, jar cheese and feta-style cheese for consumers and the foodservice industry,” Mr Wilson added. “These types of products meet a specific need or provide a nutritional benefit which consumers and customers are willing to pay a premium for and will further grow revenue for our farmer shareholders.”