New Zealand dairy cooperative Fonterra is to sell its Australian ice cream business, with the loss of 140 jobs.

In an announcement today (29 April), Fonterra said it has signed binding agreements with both Nestlé Australia and Regal Cream Products (Bulla Dairy Foods) to sell its Australian ice cream business.

Nestlé will acquire the Peters brand in Western Australia and the Connoisseur ice cream brand. Bulla, meanwhile, will buy the licence to manufacture and market the Cadbury ice cream range in Australia.

The Nestlé arrangements, which are expected to take effect on 29 June, will see the Swiss food giant integrate the production of the Peters and Connoisseur brands into its national ice cream business, with all manufacturing consolidated in its Mulgrave facility in Victoria.

John Doumani, MD of Fonterra Australia New Zealand, said the decision makes “good business sense”.

“Given Nestlé own the Peters brand in all states except Western Australia, they are the logical owners of the brand in Western Australia and the decision to sell the Peters brand to Nestlé ensures Peters remains a strong vital brand in Western Australia.

“Nestlé has the required scale, synergies and expertise to invest in both the Peters and Connoisseur brands to continue to position them as strong leadership brands in the ice cream category,” Doumani said.

In conjunction with Nestlé’s acquisition, Fonterra has also agreed to sell its remaining ice cream business in Western Australia to Bulla.

The deal will eventually see Bulla producing the Cadbury ice cream brand in its Victorian facilities. In the interim, Fonterra’s Balcatta site in Western Australia will continue to produce the range.

Commenting on the job losses, Doumani said: “We regret the impact these decisions will have on our people and we are doing everything possible to minimise the number of people affected by this announcement, including pursuing redeployment opportunities within Fonterra and employment opportunities with other companies.”