Fonterra Co-operative Group Limited (Fonterra) and The a2 Milk Company (a2MC) have entered into a comprehensive strategic relationship that links Fonterra’s global milk pool and supply chain, manufacturing capability and in-market sales and distribution capacity with a2MC’s brand strength and capabilities.
The partnership encompasses:
- New Zealand and Australian milk pools to support the strategic partnership, and in the first instance the Nutritional Products Manufacturing and Supply Agreement. Fonterra will now begin discussions with its farmers on the best way to source this A2 milk for a2MC products, and share the value it will create for farmers. It is intended that these milk pools will significantly expand over time to support new a2MC products and its new priority markets across South East Asia and the Middle East.
- Nutritional Products Manufacturing and Supply Agreement (NPMSA) whereby Fonterra will exclusively supply nutritional milk powder products in both bulk and consumer packaged formats intended for sale in a2MC’s new priority markets across South East Asia and the Middle East. These products will be produced at Fonterra’s facilities in New Zealand as well as Fonterra’s nutritionals facility, Darnum in Victoria, Australia.
- Distribution and sales arrangements, in respect of a2MC branded products whereby the companies will seek to establish distribution and sales arrangements to assist a2MC’s entry into its new priority markets across South East Asia and the Middle East.
- Exclusive period to explore a2MC branded butter and cheese, and China sourced liquid milk for sale in Australia, New Zealand and China. These relate to other dairy products not presently marketed by a2MC and would be complementary to Fonterra’s existing portfolio of dairy products.
- A jointly owned packaging facility will also be explored as an extension of the arrangements under the NPMSA and to cater for growth.
- A New Zealand Fresh Milk Licence which will see Fonterra hold an exclusive licensing arrangement for the production, distribution, sale and marketing of a2 MilkTM fresh milk for sale in New Zealand. Fonterra will leverage its substantial fresh milk capabilities to establish distribution across the country.