Fonterra sees future with Kishore Biyani in dairy business

Global dairy nutrition company Fonterra has tied up with Future Group founder Kishore Biyani to foray into the Rs 5 lakh crore Indian dairy market.

Sunil Sethi, managing director - Sri Lanka and Indian Subcontinent, Fonterra, said, "The newly inked equal joint venture between Fonterra and Future Consumer will target a minimum 5% market share in the next five years in India. We will be working on various aspects related to a smooth rollout of our products and the first few products will hit the shelves sometime in mid-2019."

The New Zealand-based world's largest dairy exporter had exited its first joint venture with Wadia Group entity Britannia in 2009.

The JV firm Fonterra Future Dairy Partners will produce a range of consumer and foodservice dairy products to address the growing demand for high-quality dairy nutrition in India.

Fonterra currently sells dairy products under brands including Anchor, Fernleaf, Perfect Italiano, Mainland, Anmum and Anlene.

The JV management doesn't rule out the possibilities of existing Fonterra brands being extended to the Indian market; the main focus will, however, be on offering unique value-added dairy products developed especially for the Indian consumers.

Lukas Paravicini, chief operating officer - global consumer and foodservice, Fonterra Co-operative Group, said, "The JV will allow us to prepare the groundwork and make the most of our expertise as we enter the world's largest and fastest growing dairy industry. Consumer demand for dairy in India over the next seven years is set to increase by 82 billion litre – seven times the forecasted growth for China."

The partnership, according to Paravicini, will be driven by growth through profitability. The initial stages of the partnership will focus on product development and marketing with the right capital investment made during this period.

The first consumer products will be launched by the middle of 2019, using both locally sourced milk and dairy products from New Zealand. "We will also use this time to settle in the partnership infrastructure, learn the market and prioritise geographies," said Paravicini, adding that the JV comes at a time when the Indian dairy industry is significantly transforming itself.

"Consumption of milk and other dairy products in India is increasing and will continue to receive strong demand. With Fonterra, Future Consumer will enhance its food and FMCG portfolio and offer a variety of dairy products that are high in demand and consumed daily,"Kishore Biyani, group chief executive officer, Future Group, said.

He said the group's Nilgiris operations that include dairy products will get merged into the new JV entity. Once launched, the dairy products will be sold through retail stores operated by Future Group across India as well as other retailers. The JV will also look at direct-to-home delivery of dairy products to its customers' on a daily basis.

MILKING BUSINESS

• The newly inked equal joint venture between Fonterra and Future Consumer will target a minimum 5% market share in the next five years in India
   
• The first consumer products will be launched by the middle of 2019, using both locally sourced milk and dairy products from New Zealand