Fonterra re-enters India with Future Consumer on board post Britannia split

Nine years after splitting with Nusli Wadia-controlled Britannia Industries, New Zealand’s Fonterra has staged a comeback by tying up with Kishore Biyani’s Future Consumer. 

On Tuesday, the two companies announced they had formed an equal joint venture (JV), Fonterra Future Dairy Partners, to produce and supply dairy and consumer products in India.  

For the world’s fifth-largest dairy company, the JV with Future Consumer will mark a new chapter, which will see the two work together to grow their dairy business in India. A chief executive for the JV is expected to be appointed shortly.

Future for its part plans to bring the dairy business of South-based Nilgiris, acquired by it around four years ago, under the new venture. Nilgiris has a dairy business of Rs1.5 billion. “We at Future plan to set up 10,000 stores by 2021, which will have a dairy business of Rs200 billion. The JV will also be part of this,” said Kishore Biyani, chief executive officer, Future Group.

The JV plans to launch products by mid-next year, and it will source ingredients locally as well as import from New Zealand, Lukas Paravicini, chief operating officer, global consumer and food service, Fonterra, said.

Paravicini said the JV would also keep pricing competitive. It will distribute products within the Future Group stores as well as in general trade and allied modern trade outlets. It will also launch value-added and innovative dairy products. “We know we cannot enter India on our own. We want to deliver high quality dairy products to Indian consumers through this partnership,” Paravicini said. 

When asked about the late entry into the domestic dairy market, Paravicini said the market here was growing fast and there was scope for many players to operate.

“We have to focus on the consumer and deliver what they want,” he said.

Besides distribution in general and modern trade, Biyani said the company would look at a subscription model. This means that for a monthly charge, the JV will deliver products directly to consumers, competing with local milk vendors. “Within the dairy space, we will launch new categories and innovative products for India’s new-age customers,” Biyani said.

Consumer demand for dairy in the country over the next seven years is set to increase by 82 billion litres – seven times the growth forecast for China. Value-added dairy products are set to grow 50 per cent faster, industry experts said.

Future Consumer has over three dozen brands and has chains such as Aadhar Wholesale and Nilgiris.