Fonterra is trying again to carve out a presence in India, with the New Zealand dairy giant announcing a joint venture with Future Consumer, one of the country’s largest consumer goods companies.
The two companies plan is to produce a range of consumer and foodservice dairy products that will help meet the “growing demand for high-quality dairy nutrition in India”. The first consumer products will be launched by the middle of 2019.
The 50-50 venture with Future Group is Fonterra’s latest attempt to crack the Indian dairy market. In the early Noughties, Fonterra set up a venture with Indian food major Britannia Industries. In 2009, Fonterra quit the venture after deciding too much investment was needed behind the business.
In 2013, the world’s largest dairy exporter established a sales office in India, setting up a base in New Delhi.
Fonterra’s presence in India is currently limited to its dairy ingredients business NZMP. The company has no business in the consumer retail or foodservice arenas.
Future Consumer is part of Indian manufacturer and retailer Future Group, which is already present in 26 of 31 Indian states with more than 2,000 trade outlets, 5,000 public distribution outlets and a nationwide cold-chain and ambient distribution network.
Fonterra said Future Group is “developing a new retail experience for consumers” in India with plans to launch 1,100 stores this year.
The stores will be within close proximity of target consumers, and “feature a complete digital experience both in-store and through a virtual marketplace”.
Lukas Paravicini, the chief operating officer for Fonterra’s global consumer and foodservice, said the partnership, under the name Fonterra Future Dairy Partners, will enable Fonterra to establish a presence in India.
“It will allow us to prepare the groundwork and make the most of our expertise as we enter the world’s largest and fastest growing dairy industry,” Paravicini said.
Consumer demand for dairy in India over the next seven years is set to increase by 82bn litres – seven times the forecasted growth for China.
“The partnership will be driven by growth through profitability. The initial stages of the partnership will focus on product development, and marketing with the right capital investment made during this period,” Paravicini said.
Kishore Biyani, the CEO of Future Group, said the association with Fonterra comes at a time when the dairy industry in India is flourishing.
“Consumption of milk and other dairy products in India are increasing and will continue to receive strong demand. With Fonterra, Future Consumer will enhance its food and FMCG portfolio and will offer a variety of dairy products which are high in demand and consumed daily,” he said.
Fonterra said that driving this growth is India’s young population – 70% of people are below 45 years old – who want to consume higher quality and higher nutritional dairy products.