From Anchor family to Lactalis Group: the logic behind Fonterra’s great unbranding

Thursday, 30 October 2025

OPINION: The vote of farmer shareholders to agree to sell the Fonterra brands business is the biggest strategic decision made by the cooperative’s members since the company was set up.

It is the result of, and an assent to, the strategic direction taken by the firm’s management and board: to focus on ingredients to sell to food manufacturers and the global hospitality trade.

The New Zealand brands associated with Fonterra that were developed under the old cooperatives and with the New Zealand Dairy board will no longer be in New Zealand ownership.

The general thinking is that Fonterra did not have the same heft, reach or expertise - or capital - that global FMCG firms did to develop at-scale investment in the brands. Instead, Fonterra will supply ingredients to the new owner, Lactalis, which can be reviewed after three years and terminated with three years’ notice. If the brands grow, so too could demand for the raw New Zealand made ingredients for them. Time will tell.

This means the end of the New Zealand ownership of brands such as Anchor, Mainland, Fernleaf, Western Star (a popular Aussie brand), Perfect Italiano (also Australian), Kapiti Fine Foods - which produces cheese - and the rest. It will include the sale of manufacturing plants across the Oceania region.

Lactalis will be hoping to leverage the image of New Zealand dairy to build these brands into massive global success stories. In the short term, it will likely not mean any change, and given the cost of living crunch most of these brands are more expensive than private label butter and cheese (i.e. Woolworths or Pams branded stuff) which is also produced by Fonterra.

But the relationship between dairy and the land - and the growth of these product brands over time - still makes this one a bit different. Anchor in particular was founded in Waikato in the 1880s while Mainland was founded in Otago in the the 1950s.

There are others. Kapiti cheese, a 1980s company bought by Fonterra in 2005. Fernleaf was a brand created for export by the New Zealand Diary Board in the 19th century.

There are lots of former New Zealand brands and companies that are now foreign owned or were never Kiwi companies in the first place. Most mainstream beers for instance. Or think about Milo, which many think of as a Kiwi drink but which was actually invented in Australia in the 1930s, marketed by what was then called Nestle’s and is actually owned by Swiss multinational Nestle.

Still there will be unease about this sale and opposition form some quarters. About 12% of Fonterra’s shareholders voted against it, and NZ First leader Winston Peters, a vocal critic, denounced the sale, taking to social media and calling it “utter madness”.

“It is economic self-sabotage. This is an outrageous short-sighted sugar hit that is just giving away New Zealand’s added value to a company from a major EU country. There is now no long-term security for New Zealand’s farmers.”

As with all of Peters’ sprays on the issue, there is no commitment to actually do anything about it, just plenty of warnings about how it contributes to the hollowing out of New Zealand manufacturing.

And there is a rich vein for Peters here to appeal to those worried about modern executives hocking off heritage brands that generations have invested in for short term returns. And appealing to a nostalgia for a New Zealand that never really existed.

The Peters critique also asks about what happens if Lactalis decides to get its milk supply elsewhere in a decade’s time or so. It is a reasonable question, but one that any long-term commodity producer constantly faces.

Part of the rationale for forming Fonterra in the early 2000s and overriding the Commerce Act to do it was to create global scale and make Fonterra a national champion. It is, really, but the brands business has always been a bit of a ‘nice to have’.

Fonterra does have global scale - but just not in branded retail products - hence the shift away from those brands. And less than 10% of the dairy produced goes into the brand products.

And Fonterra does produce high value goods. But there seems to be an obsession with parts of the New Zealand political class and commentariat that making “value-added” product means producing finished bands for supermarket shelves. It doesn’t. The company is focussing on supplying commodity rather than end consumer product. Commodity is sometimes treated as a dirty word in New Zealand, but commodities are valuable - and are not all created or priced equally. Not in metals, not in fibre, not in crops.

For a certain generation of New Zealander that grew up with Anchor and heavily identifies with those products, this will be a wrench. But there shouldn’t be too much pearl-clutching - after all, Fonterra sold off the rights to the Anchor brand in Europe over 15 years ago.

For the owners of the company - the farmers - this deal was overwhelmingly supported. It was given unanimous support from the Fonterra board of directors.

The proceeds of it, which will amount to hundreds of thousands of dollars for some farmers, are mostly expected to be used to pay down debt or make capital improvements. That will, in turn, produce a much healthier set of farm balance sheets right across the dairy sector.

Given that the deal is expected to complete in the first half of next year, it could mean some very handy payouts that at least partially wash through rural New Zealand economies five or six months before the next election.

For Kiwi consumers, little is going to change. And who knows, the products may become a bit cheaper.

And if one day down the road Fonterra wants to get back into the brands business, it can assign some capital and probably get ChatGPT to invent some good new names.