Six years after Sanlu, Fonterra’s last joint venture partner in China was the center of the Melamine infant formula scandal, Fonterra announced the acquisition of a 20% stake in infant nutrition company, Beingmate based in Zhejiang. Fonterra CEO, Theo Spierings claims that this deal is a ‘game changer’ giving the company direct access to the Chinese infant formula market. The joint venture will be established to sell Fonterra products in China and will also purchase Fonterra’s Darnum plant in Australia for a possible expansion into milk production. Many analysts assumed that Fonterra would announced a downgrade in milk prices because of a weak market, however, the world’s biggest dairy exporter is keeping to its forecast for a 2014/15 payout to farmers of NZ$6.00 per kilogram of milk solids citing improved commodity prices later in 2014 or early 2015, and long-term growth in global dairy demand. Fonterra also specifically noted that the value of the Chinese infant formula market will climb more than 80% to a value of NZ$33 billion by 2017. In addition, Fonterra announced a NZ$555 million investment into the company’s milk drying capacity which will increase its milk powder production.
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