Dairy giants Fonterra and Nestle are expanding their Dairy Partners America's joint venture into Chile.
Fonterra, through its subsidiary Soprole, and Nestle Chile are seeking regulatory approval for a 50:50 joint venture for parts of their local dairy business which, if approved, could have sales of $770 million a year.
News of the venture, to be called DPA-Chile, follows news earlier this month Fonterra was establishing a pilot dairy farm in India, having signed a memorandum of understanding with the Indian Farmers Fertiliser Co-operative and Global Dairy Health, and earlier plans to establish a second pilot farm in China.
This is part of Fonterra's strategy of working with local producers and processors to consolidate its presence in developing markets by retaining quality control of the raw material and end product.
Fonterra's global ingredients and food service managing director, Andrei Mikhalevsky, said the proposal for Chile was to expand the liquid and chilled consumer dairy market by bringing together Soprole's and Nestle's local brands, manufacturing operations, sales, distribution networks and marketing.
Fonterra's dairy ingredients and export business in Chile, Prolesur, will remain outside the joint venture, along with Nestle's milk powder, condensed milk and export products operations.
Because Soprole is contributing a larger business, Fonterra will receive $300 million when DPA-Chile is established.
The proposal still has to be approved by Chilean officials, a process Mr Mikhalevsky said had taken at least 12 months for similar applications.
