Fonterra goes shopping for cheese asset in Australia

Fonterra already has nearly a quarter of the consumer cheese market. Photo / Warren Buckland

Fonterra is to buy Australian company Dairy Country to support its consumer cheese business across the Tasman.

The acquisition price for the Victoria-based subsidiary of food and beverage company Retail Food Group is NZ$20.9 million.

The purchase, subject to regulatory approvals and standard conditions, would support Fonterra's core strengths in the A$2.6 billion ($2.8b) Australian retail cheese category, said Fonterra Australia managing director Rene Dedoncker.

Fonterra claims to have a 23 per cent share of that market with key brands such as Perfect Italiano, Bega and Mainland.

Fonterra had a long history with Dairy Country, Dedoncker said.

"Dairy Country has two well-equipped secondary processing sites with capability across grating, shredding and block as well as an experienced workforce.

"For some time we have been looking to bring more of our secondary cheese processing in-house to gain greater end-to-end control over a range of different cheese products and further strengthen our integrated supply chain.

"Having this kind of capability in-house will enable efficiencies and allow us to make the most of opportunities for value creation and product innovation."

The acquisition includes Dairy Country's processing and packing facilities at Campbellfield and Tullamarine in Victoria, as well as related services, IP and the trademark for the Dairy Country brand.

The "majority" of Dairy Country's permanent employees would transfer to Fonterra and continue to work at the two facilities.