Fonterra, Coca-Cola form Southeast Asia beverage alliance

Coca Cola's Nutriboost beverage, which it makes with Fonterra, was rolled out in Vietnam last week. Photo/Supplied.

Fonterra and Coca-Cola have formed an alliance to launch-ready-to drink beverages in Southeast Asia, starting with Vietnam.

The move comes as Fonterra moves towards joint ventures that do not involve the co-op injecting capital and as Coca-Cola looks to diversify away from drinks with a high sugar content.

Singapore-based Clare Morgan, marketing director for the Asean Fonterra & Coca-Cola Strategic Alliance, said the alliance launched a product in Vietnam last week, and would look to introduce other products in Indonesia and Thailand over time.

"We have amazing dairy know-how and they have got amazing distribution," Morgan told the Herald.

Morgan said the products typically involved a high dairy content.

The range would include products designed for children, breakfast drinks for adults, and a skincare range.

"It's a very different way for us to do business," she said.

The alliance has five members - three from Fonterra and two from Coca-Cola.

"We have come up with all the formulations using third parties to produce the product.

"It's our milk powder and our intellectual property going into the recipe, but launched under a Coca Cola brand 'Nutriboost'."

Morgan said the alliance was exploratory but could progress to becoming a fully fledged joint venture over time.

"It's exploratory but there is a big commitment from both sides to get this thing done," she said.

"Coke certainly wants to become more dairy based," said Morgan.

"A lot of their market is looking at sugar taxes, so getting a range of dairy products into these markets is very important for them," she said.

"They are amazing at distribution."

Coca-Cola generates two thirds of its revenue from outside North America.

At its first quarter result in February, chief executive James Quincey said the company was was transforming as a "consumer-centric, total beverage company".

Last year, Fonterra said it had formed a joint venture with Indian retail giant Future Group, to make a range of consumer and food service dairy products.