A2 Milk Company and Fonterra enter into strategic alliance

Posted by Andrea Hogan on 21st February 2018

The A2 Milk Company and Fonterra have entered into a strategic relationship that will see the two companies join forces for a number of key supply, distribution, sales and marketing arrangements.

News of the relationship comes on the same day A2 Milk announced that it increased its first half 2018 net profit by 150 per cent on its 2017 first half results.

A2 Milk’s and Fonterra’s strategic relationship consists of a number of elements including Fonterra becoming the exclusively supplier of A1 protein free milk products in both bulk powder form and consumer packaged form to A2.

Fonterra will now maintain an exclusive licensing agreement for the production, distribution, sale and marketing of A2 fresh milk for end sale in New Zealand.

An exclusive period will be established to explore the possible development of A2 branded butter and cheese. The period will be used to evaluate, if necessary, the negotiation of commercial arrangements for the sale of these products in Australia, New Zealand and China.

A2 Milk and Fonterra will also explore whether the two companies will establish a jointly-owned packaging facility.

Finally, Fonterra and A2 will together progressively develop a A1 protein free milk pool in New Zealand and Australia.

A2 Chief Executive Officer, Geoffrey Babidge, said the strategic relationship presents A2 with a range of significant medium and long-term opportunities.

“The Company has been evaluating the best approach to build a meaningful position for a2Milk branded fresh milk in New Zealand for some time,” Babidge said.

“In our view, the relationship with Fonterra is the ideal model to build brand awareness and deliver a consistent high-quality product to the broadest customer base in the market.

“The opportunity to work together with Fonterra to explore new markets and products is also significant.

“Fonterra’s resources and capability in many of our new priority markets should provide a basis to more quickly expand distribution of a2MC branded nutritional products. Over time additional markets and products may be added to this initiative.”


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