Farmer-owned Fonterra, which is the largest processor of milk in the world, currently serves markets in Australia, Asia, Africa, the Middle East and Latin America.
On June 17, Fonterra announced that it had successfully raised 300m Yuan (US$42m) through an issue of CNH (Chinese Yuan deliverable in Hong Kong) denominated bonds. This is significant as it marked the first time that Fonterra had issued debt denominated in Chinese Yuan, and it also became the first Australasian corporate to tap the CNH market.
According to a statement issued by Fonterra, quoting Fonterra China president Philip Turner, the funds raised would be used to support the growth of Fonterra’s China business, based in Shanghai.
The funds, according to Turner, would be deployed to expand the geographical distribution of the company’s consumer brands and foodservice dairy products from seven cities to more than 15 cities in China over the next three years.
The company will also use the funds for the rapidly expanding distribution of its foodservice products into tier 2 and 3 cities in China, as well as exploring opportunities to produce and sell a range of dairy ingredients and setting up a farm business.
Nick Stride, a communications executive for Fonterra, said the company has operated in China for more than 30 years.
“Though we do not have any formal commercial partnerships at present, we are importing dairy ingredients and we have a foodservices business supplying restaurants and cafes, and a dairy farm in Hebei Province,”he said.
India next on the map
Stride said that India is on the expansion plan for Fonterra over the next few years, with plans for China underway at the same time.
“India has 17 per cent of the world’s population and 20 per cent of the world’s children, but dairy consumption is low by western standards and there is significant potential for growth,”he said.