The ‘French Howard Hughes’ set to gain from years of equity poured into Fonterra brands

Tuesday, 12 August 2025

Anchor is the number one butter brand in China, and the most “beloved” brand in Sri Lanka, however one measures that. It is sold in over 80 countries and generates over a billion dollars a year.

OPINION: Starting in business journalism in the 1990s, and continuing to be immersed in it in the 2020s, it becomes apparent there are a few things that have not changed much in the interceding 30 years or so.

Eric Watson remains an elusive but magnetic figure for business journalists. Property developers believe themselves to be behind only Mother Theresa and Jesus Christ for their services to humankind. And “agile” is either the most brilliant method of running a business, or the most daft, but never anything in between.

Another shibboleth that has been an absolute mainstay for business over that time is the centrality of good brands to any business or organisation. Not only have business journalists like myself trudged along to hear international brand experts expound on their quasi-scientific branding formulas for success, but we’ve also been treated to brand expositions (colour, shape, meaning, “feel”) on pretty much any entity that has not just customers, but stakeholders as well. Which is pretty much any organisation that’s ever been created.

Lactalis, the world’s largest cheesemaker, can see the value in Fonterra’s brands. But Fonterra, for some reason, can’t.

And that is why, while it has long been mooted and looks closer than ever before, the sell off of Fonterra’s consumer brands remains, for this business journalist, a slap upside the head that threatens to dislodge every message on branding rammed home over her career.

A summary to this point: It has been revealed this week that French dairy giant Lactalis is the leading bidder for Fonterra’s consumer brands business - provisionally called Mainland Group - containing the likes of Mainland, Perfect Italiano cheese, Kāpiti and Anchor butter. It has bid for the business alongside Japan’s Meiji, ASX-listed Bega Group, and Dutch group FrieslandCampina, among others.

These international giants can appreciate the value of having premium New Zealand dairy products in their portfolio, but for some reason, our own Fonterra can not.

Putting aside the fact that New Zealanders may be somewhat sour on these brands when they open their supermarket chillers and realise no, it’s not the affordable staple they once knew, these brands are the best of New Zealand dairy.

In a key sense, they are New Zealand dairy.

Fonterra Anchor butter - New Zealand Inc in a pat.

They are the brands that represent the very best of New Zealand Inc. across key (but by no means tapped-out) markets including China, Malaysia, Singapore, and Sri Lanka. Anchor is actually the number one butter brand in China, and the most “beloved” brand in Sri Lanka, however one measures that. It is sold in over 80 countries and generates over a billion dollars a year.

Fonterra’s argument is that it’s not a brands business - and that its own brands have “no competitive advantage” over other brands, which goes against everything the world understands about New Zealand’s extremely positive positioning in premium food production and food safety. Fonterra further says a new owner with the right expertise and resources is required to unlock the brands’ full potential.

Somehow, this country has, over decades, found the right expertise and resources to pour into these brands to grow them into the global powerhouses they are today. But a dairy company that ranks within the world’s top five dairy companies lacks the ability to “do more” with the brands.

It seems hard to believe.

Emmanuel Besnier, the “Emperor of Cheese”, stands to gain greatly from Lactalis’ new buy.

Now, Fonterra seems set to become a commodity supplier of milk powder and other ingredients, to be made into valuable branded products by other companies (specifically, Lactalis if it is successful in buying the business). That in itself seems like a risky proposition. Generic milk powder, and even ingredients, no matter how good they are, carry with them no specific provenance in the minds of consumers, even if they are business consumers, and can be replaced quite easily when they become too expensive.

New Zealand is, as we keep hearing, the most efficient producer of milk powder in the world, so we do have that advantage. But countries like China and those across the EU stand ready to overtake us in being not only efficient but also more environmentally on point. It may not always be as positive as it is now to buy New Zealand made.

How does the New Zealand dairy industry buffer itself against an uncertain future? By, as leading IP lawyer Clive Elliott says, replicating the likes of Unilever and Nestlé in honing in on marketing, innovation and understanding consumer needs, and creating brands that will stand the test of time, regardless of macroeconomics.

Ideally, New Zealanders would stand to gain from these efforts, and if Fonterra can not underwrite this work, then at least New Zealand shareholders should have been given the option through a public offering of shares in this venture. It would have meant keeping profits local, but would have also given the NZX a much-needed boost.

Instead, we stand to see earnings from the brands that have had enormous amounts of local equity invested in them (mainly) benefiting French billionaire Emmanuel Besnier, the majority owner of Lactalis, who is otherwise known as the 'French Howard Hughes' and 'the Emperor of Cheese”.

Quel dommage it has come to this!