Dairy group Fonterra and Landmark, the rural services and financing business of grain exporter ABW, have entered into a 50/50 partnership in New Zealand and formed a Strategic Dairy Alliance in Australia with the aim of expanding services in the dairy sector.
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In New Zealand, where Fonterra currently operate 51 RD1 stores that focus on the specialist needs of dairy farmers, the joint venture will allow RD1 stores to offer a variety of new services, including finance, insurance, real estate and livestock sales services. Products related to the beef, sheep and cropping sectors will be introduced at a later date, the companies said, while the store network will also be expanded to cater to more rural communities.
In Australia, where Landmark currently operates 430 stores, the Dairy Alliance will use Fonterra’s experience to expand Landmark’s products and services in the dairy sector. Initially, 11 stores in Victoria will be co-branded Landmark Fonterra, with plans to gradually increase the number of stores across Australia. The two companies will share the profits from growth in the Landmark Fonterra stores.
Announcing the deal, RD1 CEO John Lea and general manager of Landmark Sales and Operations Michael Thomas said the arrangements will take advantage of the companies’ complementary strengths.
Lea said the companies have a combined procurement base of over NZ$2bn (US$1.24bn).
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By GlobalData“We will use our procurement base to ensure we maintain our everyday low prices and great service for New Zealand farmers. Also, by sharing our knowledge of different farming sectors we can expand the product range on both sides of the Tasman to benefit both Landmark and Fonterra,” Lea said.
“The RD1 stores in New Zealand and the Landmark Fonterra outlets in Australia are destined to become the leading one-stop shop for all the supply needs of dairy farmers.
“This will provide dairy farmers with access to real estate, finance, insurance and other services along with their specialist dairy supplies. These will not only be available at one store, but potentially all on one credit account that farmers can pay for through their Fonterra milk cheque. New Zealand farmers already enjoy the convenience of paying this way, and we will extend it so all our Australian farmers can experience the same benefits,” he said.
Landmark said that the partnership with Fonterra would provide valuable in-roads into the dairy sector, which the company has identified as an important growth opportunity.
Thomas said the Dairy Alliance in Australia will provide a greater range of products and services to meet the needs of the dairy sector, especially Fonterra’s 2,000 dairy farmer suppliers in Australia.
“By teaming up with established players in each other’s countries, we both gain low-risk entry to new markets and take advantage of each other’s existing store networks,” he said.
“The ability to leverage Fonterra’s dairy expertise strongly positions Landmark to increase its market share in Australia. This partnership aligns with the company’s growth strategy and puts Landmark in a great position to rapidly expand its current capabilities and increase our products and services to dairy farmers,” Thomas said.
