Kiwi Dairies wants to take over the Nelson company selling the milk of its big rival, Anchor, through the top of the South Island.
Kiwi's domestic subsidiary, Mainland Products, has applied to the Commerce Commission for approval to take over the town-milk processor Nelson Milk, which markets New Zealand Dairy Group's
Anchor-brand milk in Nelson and Blenheim and on the West Coast.
Kiwi said Anchor would lose market share when Nelson Milk switched to Kiwi brands, but could "import" milk from Invercargill or Auckland until it could bottle milk at its Clandeboye factory, 32km north of Timaru, or at Christchurch's Tip Top factory.
Nelson Milk is owned by supplier-shareholders from the Tasman Milk Products farmer co-operative. The company has been an active participant in the South Island's "milk wars" between rival town milk brands.
It supplies about half the Nelson region's milk.
Kiwi said in its application to the commission that about 75 per cent of Nelson Milk's product was Anchor brand milk under a franchise from Dairy Group's domestic company, NZ Dairy Foods.
The rest of its product was Nelson's own Sun City milk.
Kiwi's milk brands supplied the other half of the Nelson region.
Since July 1997, Kiwi and Dairy Group have been competing head-on, both using high-cost deliveries through milk vendors.
Kiwi said both were either making a minimal profit or losing money in the process.
It said the takeover of Nelson Milk was not primarily about market share, but it withheld from public release the percentage of market share it expected to pick up from Anchor.
"Rather, this acquisition will resolve the current no-win situation," said Mainland's beverages manager, Geoff Norgate.
His company expected to lift its market share, rationalise deliveries and compete with Dairy Group to supply the main supermarkets and service stations.
Kiwi supplied most of the South Island's milk from its Christchurch base, with Southland and Otago supplied from Dunedin.
Dairy Group relied on Anchor franchises operated by Invercargill-based town-milk company Southern Fresh and, until now, by Nelson Milk.
- NZPA
