Fonterra announces new business strategy

By Prateek V

Fonterra has announced a new strategy that intends to supplement its 10,000 NZ milk suppliers with offshore “milk components”

Chief Executive, Mike Hurrel says, “we are a New Zealand co-op, doing amazing things with New Zealand milk to enhance people’s lives and create value for customers and farmers. It’s a strategy that’s rich in innovation, sustainability and efficiency. It unlocks value and sees us focusing on three goals – healthy people, healthy environment and healthy business.”

Fonterra will turn its focus towards dairy ingredients that meet nutritional needs for global consumers. The new products will cater towards a range of consumer needs including Paediatrics, medical and ageing, sports and active, and core dairy and capitalise on pre-existing markets that Fonterra has had success with, namely in China and across Australasia.

“This is the right strategy for us, but it requires us to make some hard choices. We’ve looked at the big opportunities and risks for a New Zealand dairy co-op today. We’ve also got clear on what our strengths are and the hard realities we have to face up to. I’m pleased that we now have a strategy that is built from the belief that our farmers’ milk here in New Zealand is the best and most precious in the world.


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The new strategy comes off the back of recent losses for Fonterra reach A$605mn during the July year, which was better than the expected $826mn, mostly anticipated through its offshore businesses. This followed on from previous losses of $196mn and has instigated asset sales and the new strategy is looking to take the business in a new direction to open sales in successful markets.

Fonterra Chairman John Monaghan said of the new strategy, “Simplicity shouldn’t be confused with a lack of ambition. Our forecast earnings range for FY20 starts at 15-25 cents per share, but the five-year plan is to deliver a target of 50 cents per share.”


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