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Dairy Giant Starts Expansion into MENA Region

Fonterra Cooperative Group Ltd, the world’s biggest exporter of dairy products, reached a final accord to take full ownership of Saudi New Zealand Dairy Products Co to aid its expansion in the .

The company will buy the 51 percent stake from partner Saudi Dairy & Foodstuff Co for $33 million, the Auckland based milk processor said yesterday in an e-mailed statement. The deal is subject to Saudi regulatory approval.

Saudi New Zealand’s plant was started in 1996 and processes about 30,000 metric tons of New Zealand milk a year for sale in the Middle East, Africa, and Eastern Europe. Ownership will allow for further expansion, Fonterra said.

“We are building a sizable business in 20 countries in this region,” Fonterra’s regional managing director Mark Wilson said in the statement.

He added: “It is critical that we have long-term access to manufacturing capacity near these markets.”

Saudi Arabia’s population is growing about 2 percent a year, increasing demand for milk powders and cheese sold by Fonterra and rivals Nestle SA, Kraft Foods Inc. and Almarai Co, the kingdom’s biggest food processor.

The Arab Free Trade Agreement means Saudi New Zealand can sell product free of duty in the six Gulf Cooperation Council states and 22 other signatory countries, Wilson said.

That provides a “significant advantage” over products imported into the region, he added.

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