New Zealand dairy giant Fonterra on Thursday welcomed moves to establish a joint venture with a major Chinese infant food maker in Australia.
Fonterra Cooperative Group Ltd. confirmed the board of Beingmate Baby and Child Food Company Ltd. had formally approved a joint venture to purchase Fonterra's Darnum plant in the Australian state of Victoria.
Fonterra chief executive Theo Spierings said China was a key strategic market for Fonterra, and the partnership would create a fully integrated global supply chain from the farm gate direct to China's consumers, using Fonterra's milk pools and manufacturing sites in New Zealand, Australia, and Europe.
"By working with Beingmate, we are creating additional demand for ingredients and high-value pediatric and maternal nutrition products made from our New Zealand milk, complemented by milk drawn from other international milk pools," Spierings said in a statement.
Beingmate would own 51 percent of the joint venture and Fonterra will retain a 49-percent stake, and run the plant operation.
In March, Fonterra bought an 18.8-percent stake in Beingmate at a cost of 3.46 billion yuan (545.24 million U.S. dollars).
The partnership included the joint venture to buy Fonterra's Darnum plant and a distribution deal for Fonterra's Anmum brand in the Chinese mainland.
"Our partnership with Beingmate is already strengthening the presence of our Anmum infant formula brand. Distribution through Beingmate is underway, with the first shipments landed in China in June," said Spierings.
The Beingmate board's approval of the joint venture would be put to a vote of Beingmate shareholders at a meeting on Nov. 16.
Fonterra has estimated the infant formula market in China is worth about 18 billion NZ dollars (12.02 billion U.S. dollars) and was expected to be worth 33 billion NZ dollars (22.03 billion U.S. dollars) by 2017.
