The heads of Swiss food group Nestle and New Zealand dairy group Fonterra Co-operative signed an agreement on Monday to form Dairy Partners Americas (DPA), a new dairy alliance.
In a statement, Nestle said that the alliance will aim to implement in the Americas a number of joint ventures in the dairy field, subject to regulatory approval and other clearances. The joint ventures will cover a wide range of dairy products, including shelf stable as well as chilled refrigerated milk foods and beverages, under the existing brands of the two partners.
Infant formula, evaporated and condensed milks, certain speciality products, cheese and butter are not covered by the alliance. The joint ventures will be managed by senior executives from both founding partners, reporting to a joint supervisory board of six members.
The partners underlined that they are hoping for significant benefits from their alliance, in particular: combined sales growth in existing and new markets; optimisation of capital expenditures through optimal use of each others' assets; cost efficiency through the use of their respective infrastructures; better use of resources in distribution; manufacturing strengths and research and development, as well as purchasing synergies.
The new alliance is aiming for a favourable development of the quantity, quality and costs of fresh milk through the development of state-of-the-art dairy farming practices in host countries.