Fonterra & a2 Milk Company form Global Relationship

,
21 February 2018

FONTERRA AND THE a2 MILK COMPANY FORM GLOBAL STRATEGIC RELATIONSHIP

Fonterra Co-operative Group Limited (Fonterra) and The a2 Milk Company (a2MC) have today
entered into a comprehensive strategic relationship that links Fonterra’s global milk pool and supply
chain, manufacturing capability and in-market sales and distribution capacity with a2MC’s brand
strength and capabilities.
As part of the partnership, Fonterra will now begin conversations with its farmers to source an A2 milk
pool for a2MC products in New Zealand, which is intended to significantly expand over time to help
meet the growing demand for a2MC products. A similar milk pool in Australia will also be developed.
Announcing the deal, Fonterra CEO Theo Spierings and a2MC Managing Director and CEO Geoffrey
Babidge said the partnership is designed to generate returns for both companies by growing demand
in both local and international markets for products using a2MC’s brand strength and capabilities.
“The partnership is intended to fast-track market growth and this creates opportunity for our farmers to
create additional value from their milk,” said Mr Spierings. “Fonterra’s high quality milk pools, our
global supply chain, our manufacturing capabilities and knowledge, and our in-market sales and
distribution expertise is being combined with a2MC’s brand strength to unlock new opportunities in a
wide range of international markets. It is a win-win for both companies.
“We continue to see a strong future for dairy based on our existing range of products, including recent
additions such as organic, low-lactose and high protein milk choices that consumers seek out for a
premium. The a2MC products promoted by this partnership sit well within our overall portfolio of
products.
“Consumers like to have choices and the growth of a2MC branded nutritional powders and fresh milk
sales in Australia, for example, shows the potential. This partnership is all about finding ways to
continue to delight our consumers and generate more value for our farmers.”
The partnership encompasses:
 New Zealand and Australian milk pools to support the strategic partnership, and in the first
instance the Nutritional Products Manufacturing and Supply Agreement. Fonterra will now
begin discussions with its farmers on the best way to source this A2 milk for a2MC products,

Fonterra Co-operative Group
Confidential to Fonterra Co-operative Group Page 2

and share the value it will create for farmers. It is intended that these milk pools will significantly
expand over time to support new a2MC products and its new priority markets across South
East Asia and the Middle East.
 Nutritional Products Manufacturing and Supply Agreement (NPMSA) whereby Fonterra
will exclusively supply nutritional milk powder products in both bulk and consumer packaged
formats intended for sale in a2MC’s new priority markets across South East Asia and the
Middle East. These products will be produced at Fonterra’s facilities in New Zealand as well as
Fonterra’s nutritionals facility, Darnum in Victoria, Australia.
 Distribution and sales arrangements, in respect of a2MC branded products whereby the
companies will seek to establish distribution and sales arrangements to assist a2MC’s entry
into its new priority markets across South East Asia and the Middle East.
 Exclusive period to explore a2MC branded butter and cheese, and China sourced liquid
milk for sale in Australia, New Zealand and China. These relate to other dairy products not
presently marketed by a2MC and would be complementary to Fonterra’s existing portfolio of
dairy products.
 A jointly owned packaging facility will also be explored as an extension of the arrangements
under the NPMSA and to cater for growth.
 A New Zealand Fresh Milk Licence which will see Fonterra hold an exclusive licensing
arrangement for the production, distribution, sale and marketing of a2 Milk
TM
fresh milk for sale
in New Zealand. Fonterra will leverage its substantial fresh milk capabilities to establish
distribution across the country.


ENDS

For further information contact:
Dan Wrigley
Fonterra Communications
Phone: +64 21 820 679

24-hour media line
Phone: +64 21 507 072

About Fonterra
We’re a global dairy nutrition company owned by more than 10,000 farmers and their families. We’ve built our
expertise on the legacy of the thousands of farmers who’ve made New Zealand a world leader in dairy. With a
can-do attitude and a collaborative spirit, we’re a world leading dairy exporter. Our 22,000 people share the
goodness of dairy nutrition with the world through our innovative consumer, foodservice and ingredient solutions
brands, and our farming and processing operations across four continents.

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