FONTERRA is looking to capitalise on the growing Chinese baby formula market, announcing plans to spend $1.7 billion on a 20% stake in China’s Beingmate Baby & Child as well as significantly increasing its New Zealand based processing capabilities. The 20% ownership of Beingmate is costing the dairy giant $615 million while upgrades and expansions to its Waikato and Southland processing facilities is expected to top $555 million. Fonterra’s CEO Theo Spierings says the Chinese baby formula market is expected to double in the next five years and its new partnership is completely different to its prior stake in Sanlu, which was involved in 2008’s toxic melamine scandal.
“If we want to be globally relevant, then we have to be part of the Chinese dairy industry,” says Spierings.