Copyright farmersweekly
Reading Time: 2 minutes By Kate Green of RNZ The sale of Fonterra’s consumer brands Mainland and Anchor won’t mean much for consumers or supermarket prices – at least in the short-term – according to dairy industry experts. At a meeting on Thursday, more than 88 percent of Fonterra’s farmer shareholders voted in favour of the $4.2 billion sale to French company Lactalis. Former Kiwi dairy farmer, and now senior manager of global dairy insights for HighGround Dairy in the United States, Stu Davison, said consumers shouldn’t expect to see a huge change in pricing or quality. “A lot of that product is still going to be supplied by Fonterra,” he said. “So that quality shouldn’t move a whole lot.” The current contract will see Fonterra supplying ingredients to Lactalis for at least the next three years. In the near-term, Davison said, pricing would need to remain competitive. “The price should be what it is now, which is reflective of global pricing. So don’t expect a large change because of the sale further up the tree.” Beyond the end of the three-year contract with Fonterra, he expected the quality to remain consistent. “Lactalis globally, especially in France where they’re headquartered, are known for decent quality dairy products, so I wouldn’t expect them to reduce the quality whatsoever.” “New Zealand’s a pretty discerning dairy market, so I can’t imagine they’d get that one past consumers – they wouldn’t see that as good brand process.” Would those discerning New Zealanders turn to other brands instead in an effort to buy local? Davison said if that was the case, shoppers would already be avoiding a number of other brands that remained popular – for example, Meadowfresh, which is owned by Goodman Fielder, which is owned by Wilmar International, based in Singapore. “Price is usually the biggest driver,” he said. Professor Lisa McNeill from the Otago Business School said during a cost of living crisis, people “were not able, perhaps, to prioritise the local brands, or the brands they would like to purchase, because for some products – particularly a commodity product like butter – it actually comes down to price”. There were a number of butter brands made in New Zealand, but most had some level of overseas investment, she said – for example, Lewis Road Creamery, made locally but with substantial European investment, and Westgold, made in Hokitika but owned by Chinese company Yili. Anchor and Mainland, despite their new ownership, could still be considered local. “If it’s made here, it’s still putting money into our economy, it’s still providing jobs.” Consumers likely wouldn’t notice any difference, she said. “If the new French owners of the brand decide to get rid of the Mainland and Anchor brands and use their own branding, that’s going to have more of an effect.”
