Fonterra to acquire Tamar Valley Dairy

Posted by AFN Staff Writers on 11th November 2013

New Zealand based dairy giant Fonterra has announced it will acquire the assets of Tasmanian yoghurt business, Tamar Valley Dairy.

Under the agreement, Fonterra will acquire the processing equipment, related services, and intellectual property and trademark for the Tamar Valley Dairy brand. The acquisition will be effective from near the end of November 2013 (subject to completion of the sale), with the exact date to be confirmed.

“Fonterra is a long-standing partner of Tamar Valley Dairy, and has supported and worked closely with the administrators of the family owned business during what has recently been a difficult period for the Tasmanian business and its founders,” said Judith Swales, Managing Director, Fonterra Australia.

“The founding family has created a business with strong capability and innovation, known for producing new yoghurt formats and formulations, and in a relatively short timeframe they have built a national brand in Tamar Valley Dairy,” Ms Swales said.

Fonterra said it plans to invest further to “improve the manufacturing assets, upgrade quality and safety systems, invest in people in the business, and build capability for further innovation in the yoghurt category”.

Fonterra “committed” to retaining Tamar Valley Dairy’s Tasmanian heritage

The Tamar Valley Dairy site will be fully integrated into Fonterra’s Tasmanian and Australian manufacturing footprint, which Fonterra said will create greater efficiencies and scale, and ensuring that Tamar Valley Dairy’s innovation and its Tasmanian origin continues.

“Fonterra is committed to the total value chain in Tasmania – from farmers, to employees, related suppliers and services, and to the current and future Australian customers and consumers the world-class operation and its products will attract,” Ms Swales said.

Fonterra said acquiring the Tamar Valley Dairy yoghurt business was a “very important step” in strengthening Fonterra’s position in the chilled dairy segment in Australia, and complements its existing yoghurt portfolio. Fonterra holds a market-leading position in mainstream yoghurt through the Nestle SKI brand.

Fonterra said that in coming to the agreement with Tamar Valley Dairy the businesses addressed to key considerations: that the business will remain in Tasmania, which Fonterra said it is “committed to”, and that “as many Tamar Valley Dairy employees as possible remain employed”.

Over the next month, Fonterra said it will work closely with Tamar Valley Dairy to determine the right roles and employees for these roles to ensure a “seamless transition and continuity of operations” under Fonterra ownership.

“Tamar Valley Dairy will have a strong future,” Ms Swales said. “We see tremendous opportunity in the Tamar Valley Dairy business, and we need to ensure we have the right skill set and expertise to build a sustainable, competitive business for the long term,” she said.

“We recognise this has been a difficult period for the business, the founding family, employees, customers and suppliers,” Ms Swales said.

“As we work with Tamar Valley Dairy management and the administrators to transition the business into our operations, we ask for on-going support and commitment from all Tamar Valley Dairy stakeholders,” Ms Swales said. “By collaborating, together we can provide stability and continuity, and importantly continue to provide the Launceston community with the benefits of the Tamar Valley Dairy operations and continue its legacy,” she said.

Australian Food News reported in May 2013 that Tamar Valley Dairy’s creditors had allowed the Company to continue trading in an effort to repay debts that were reportedly up to $9 million.

In Tasmania, Fonterra operates two manufacturing facilities at Spreyton and Wynyard, is responsible for processing over half of Tasmania’s milk, collecting almost 500 million litres of milk from almost 260 dairy farms each year, and employs 220 people. Over the last two years Fonterra has invested $20 million in these operations.

Tamar Valley Dairy has been acquired by Fonterra