Fonterra and Landmark have teamed up to expand their services to farmers on both sides of the Tasman through a 50/50 joint venture in New Zealand and a strategic Dairy Alliance in Australia.
The joint venture and Alliance, which represent a net NZ$35-45 million investment by Landmark and is subject to standard conditions being satisfied, supports both companies’ growth strategies and underlines a commitment to invest in the dairy sector and serve the needs of dairy farmers.
Through its 51 RD1 rural retail stores in New Zealand, Fonterra is a leader in serving the specialist needs of dairy farmers, while Landmark’s 430 stores in Australia offer a wide range of added value services to Australian agribusinesses.
Through the joint venture in New Zealand, Fonterra’s RD1 stores will introduce new services in finance, insurance, and real estate, and an expanded livestock sales service, drawing on Landmark’s expertise in these areas. Products and services catering to the beef, sheep and cropping sectors will be introduced over time to complement RD1’s existing strengths in dairy. RD1 will also gradually expand its network of stores, particularly to cater to Fonterra suppliers in the South Island.
In Australia, the Dairy Alliance between the two companies will use Fonterra’s experience to expand Landmark’s products and services to the dairy sector. Initially the Alliance will involve 11 Landmark stores in Victoria, which will be co-branded Landmark Fonterra, with plans to gradually increase the number of stores across Australia in the future. Farmers in Australia can expect to see changes in these stores and the rollout of the Landmark Fonterra brand name over the next few months. The two companies will share profits from growth in the Landmark Fonterra stores.
In announcing the deal, RD1 CEO John Lea and General Manager of Landmark Sales and Operations Michael Thomas said the arrangements will take advantage of the companies’ complementary strengths.
Mr Lea said the companies have a combined procurement base of over NZ$2 billion.
“We will use our procurement base to ensure we maintain our everyday low prices and great service for New Zealand farmers. Also, by sharing our knowledge of different farming sectors we can expand the product range on both sides of the Tasman to benefit both Landmark and Fonterra,” Mr Lea said.
“The RD1 stores in New Zealand and the Landmark Fonterra outlets in Australia are destined to become the leading one-stop shop for all the supply needs of dairy farmers.
“This will provide dairy farmers with access to real estate, finance, insurance and other services along with their specialist dairy supplies. These will not only be available at one store, but potentially all on one credit account that farmers can pay for through their Fonterra milk cheque. New Zealand farmers already enjoy the convenience of paying this way, and we will extend it so all our Australian farmers can experience the same benefits,” he said.
By partnering with Fonterra, New Zealand’s largest company, Landmark gains a foothold in the dairy sector, which it has identified as an important growth opportunity, and a national network in New Zealand with a growing range of products and services.
Mr Thomas said the Dairy Alliance in Australia will provide a greater range of products and services to meet the needs of the dairy sector, especially Fonterra’s 2,000 dairy farmer suppliers in Australia.
“By teaming up with established players in each other’s countries, we both gain low-risk entry to new markets and take advantage of each other’s existing store networks,” he said.
“The ability to leverage Fonterra’s dairy expertise strongly positions Landmark to increase its market share in Australia. This partnership aligns with the company’s growth strategy and puts Landmark in a great position to rapidly expand its current capabilities and increase our products and services to dairy farmers,” Mr Thomas said.
Fonterra’s General Manager of Milk Supply Australia, Mr Steve Nelson, said the Dairy Alliance was both a natural fit with Fonterra’s increasingly Australasian home base and underlined its commitment to a successful Australian dairy sector.
“Landmark Fonterra stores will give Fonterra a greater presence in the local dairy communities and meet farmers’ calls for improved access to specialist dairy merchandise and agency expertise in areas such as livestock, real estate, insurance, and financial services,” Mr Nelson said.
“We are confident the Dairy Alliance will create a strong platform for future growth in the Australian dairy sector,” he said.
The operations in both countries will be governed by a joint board with representatives from both Landmark and Fonterra.
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Fonterra Co-operative Group Limited was formed in 2001 when New Zealand’s two largest dairy co-operatives merged with the New Zealand Dairy Board – the former single desk seller. Today, Fonterra is a global dairy business. It is involved in large-scale milk procurement, processing and management, with an efficient supply chain spanning more than 140 countries. It is New Zealand’s largest company with NZ$11.8 billion in total assets, revenues of NZ$12.3 billion and over 18,000 people worldwide. In the 2004/05 financial year, Fonterra collected over 19 billion litres of milk globally and sold 2.4 million tonnes of dairy products. Every day, milk from Fonterra’s 11,000 New Zealand shareholders, as well as from dairy farmers in other parts of the world, such as Australia, Sri Lanka, Chile, Brazil, Argentina and the US, is collected and processed into dairy products that are marketed around the world.
About Fonterra in Australia
Fonterra considers Australia to be part of its home market. Its legacy companies had been operating businesses in Australia since the 1960s. Today, Fonterra has world class manufacturing sites, strong domestic ingredients and consumer businesses, and export operations throughout Australia. In Australia, Fonterra has revenues of A$1.9 billion, processes 21 per cent of Australian milk and employs over 2,000 people. Many of its brands are household names in Australia, including Bega, Brownes, Connoisseur, Mainland, Perfect Italiano and Western Star.
Landmark is one of Australia’s largest suppliers of farm inputs and rural services, employing 2000 people and servicing over 100,000 customers across the country. As well as providing a comprehensive range of insurance solutions and access to a new and improved suite of financial services, Landmark also offers agronomic advice, wool and livestock marketing and real estate sales. Landmark is also one of Australia’s largest suppliers of merchandise, fertiliser and chemicals from over 430 outlets nationwide.