Farmers approve $4.2 billion Mainland sale by Fonterra for once-in-a-generation windfall

Thursday, 30 October 2025

Fonterra has got farmer approval to sell its Mainland consumer brands business to French multi-national dairy giant Lactalis.

Fonterra farmer-shareholders have voted overwhelmingly in favour of selling its Mainland consumer brands business to French multi-national dairy giant Lactalis.

At the company’s special general meeting this morning, 88.47% of the total farmer votes cast were in support of the divestment.

The $4.22 billion sale marks a significant moment in Fonterra management’s transformation plan for the cooperative, which will focus on supplying ingredients to food manufacturers and the global hospitality trade.

The plan to sell the consumer brands business, which owns the venerable Anchor brand, was first mooted in May last year, and is expected to see around $3.2b in capital returned to its share-owning dairy farmers.

The successful vote came as little surprise, even after NZ First leader Winston Peters urged farmers to vote against the plan to keep the consumer brands in New Zealand ownership.

ASB economists expected the capital return to send a roughly $4.5b spending effect rippling through the economy as farmers put the capital to work, especially as it comes against a backdrop of a strong farm gate milk price.

Dairy farmer Brendan Attrill expects farmers to reduce debts, but also to invest in improving their environmental footprints.

Most of the capital return would end up being spent on reducing farm debt, ASB expected, but some would be invested in farm businesses, and some would be spent by farmers to boost their lifestyles.

Dairy farmer Brendan Attrill expects to see a large chunk of the capital returned deployed into reducing farm debt.

But he also saw the capital return as a once-in-a-generation chance for farms to invest in reducing their environmental impact.

“I am expecting some of the money to go towards investing farm effluent systems.

“That will ensure operations of farms can keep being sustainable,” he said, which included keeping them in good shape to be passed to the next generation of farmers.

That would have a positive impact on freshwater quality and biodiversity, he hoped.

There was also an opportunity for dairy farms to invest in reducing their climate emissions, including through solar power systems.

However, Attrill said scientific progress was needed to tackle dairy emissions.

Like ASB, he thought a significant chunk of the money returned by Fonterra would be used to take a chunk out of the roughly $63b of agri sector debt.

That would improve farm balance sheets, and build in resilience for the next time global milk prices fall.

But he was also expecting to see hard-working farmers spend some of the money living it up.

He hoped farmers would take some of the capital return and spend it on things that were “precious to them”.

This could included taking a long overdue holiday with loved ones, he said.

“We have all got our dreams,” he said.

At a special shareholder meeting on Thursday, Fonterra chair Peter McBride told farmer shareholders that Fonterra had not taken the decision to sell the consumer brands business lightly.

The sale process had been rigorous, and the price Lactalis was paying exceeded expectations, he said.

However, he said: “I know many of you have an emotional connection to the brands and may be mourning their potential change of ownership.”

The business would be more simple, and investment in innovation would be more focused on developing food service and ingredients products.

But, he said the deal was not without risk.

There was a risk that at some future date Lactalis might decide to buy less from Fonterra, and source milk from elsewhere.

“Customer loyalty cannot be written into a contract forever,” he said.

Miles Hurrell, Fonterra chief executive, said the sale of the consumer brands business would pave the way to higher sustained return on equity for shareholders, higher dividends to farmers, and the return of precious capital to farmers.

“Ultimately, post-investment will be a more focused business with a lower cost base, delivering a better return to farmers,” Hurrell said.

“We have a clear plan for the co op's future that will build end to end value for generations of farmers to come.”

The sale was backed by the Fonterra board.

ASB saw pros and cons to the Fonterra sale.

The cons included Fonterra becoming more dependent on exports to China as a proportion of its business, more commodity-focused, and it would lose its stake in a portion of the value-added dairy market.

However, the bank’s economist noted that Fonterra’s consumer division had struggled to maintain pace in the competitive, fast-moving consumer goods (FMCG) market, and would be able to focus on its ingredients and food service operations, which had been more successful.