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Home / Business

Fonterra sets its boundaries

4 Nov, 2002 09:13 AM2 mins to read

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By CHRIS DANIELS

New Zealand's largest company, the dairy giant Fonterra, has unveiled its grand strategy for the next decade.

At its heart is the promise of 13 per cent to 15 per cent annual returns to its 13,000 shareholders, coupled with farm productivity gains of 3 to 4 per cent.

It
has announced seven "strategic themes" it believes form the core of its business, which it hopes will allow the company to develop what chief executive Craig Norgate yesterday described as a "narrower, deeper focus".

Business plans must fit within the walls set down by this strategy, which Fonterra says began its life earlier this year as a blank piece of paper.

At its centre are two important "cornerstones" - namely being the lowest cost commodity supplier of milk and the leading price and inventory manager in the global commodity market.

Retaining Fonterra's low-cost position must be defended aggressively, the strategy says, as this has always been a core competitive advantage.

"The strategy is about direction rather than specific plans,"said chairman Henry van der Heyden. "The real numbers will come when we take the direction outlined here and develop plans to implement it."

For the first time, said van der Heyden, there was a strategy that focused all efforts on building the strong foundations of Fonterra.

He stressed the commitment to take every drop of milk from the shareholder members, but said much of future growth could come from milk supplied by non-members, particularly from overseas.



Fonterra Shareholders' Council chairman Tony O'Boyle welcomed it as a "common sense strategy" to create sustainable wealth for the shareholders.

Kevin Wooding, chairman of Dairy Farmers of New Zealand, said farmers, as a fairly conservative group, would welcome the strategy, which he described as not being too ambitious.

The seven strategic themes

* Lowest-cost supplier of commodity dairy products.

* Leading price and inventory manager in the global commodity market.

* Effective developer of dairy ingredients partnerships in selected markets.

* Leading specialty milk components innovator and solutions provider.

* Leading consumer nutritional milk marketer.

* Leading dairy marketer to foodservice in key markets.

* Develop integrated strategies for four key regional markets.

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