Fonterra Australia is selling its 94-year-old southern NSW processing business at Wagga Wagga to the newly-formed investment outfit, Blue River Group.
The sale covers the Wagga Wagga manufacturing site and the Riverina Fresh brand, but no price has been disclosed.
The deal is expected to be completed the sale during October, but is still subject to a number of conditions by both the parties.
All Fonterra’s employees in the Wagga Wagga business have received offers of employment from Blue River, which established last year as an investment services firm.
Blue River undertakes investment projects and deals with the aim of generating economic returns for investors and achieving “measurable social or environmental outcomes”.
The firm describes itself as a "profit with purpose" impact investment business.
Fonterra’s Australian managing director, René Dedoncker, said the Wagga business was strong but not core to the New Zealand-owned co-operative’s ingredients, consumer and foodservice business strategy in Australia.
“Divesting the Wagga Wagga business follows the divestment of other non-core assets, including our yoghurt and dairy desserts business, our Bega shares and our stake in Dairy Technical Services,” he said.
“It allows us to focus and put all our energy into our core businesses of ingredients, consumer and foodservice.
“Our Australian operations have particular ingredients strengths in cheese, whey and nutritionals, matched by our manufacturing footprint in Victoria and Tasmania.”
Blue River Group’s founder and co chief executive officer, Craig Shapiro, said buying Riverina Fresh reflected his company’s ethos of investing in businesses which generated economic returns while also achieving “positive and measurable social or environmental outcomes”.
“The Wagga Wagga dairy business and the iconic Riverina Fresh brand provide Blue River Group with a fantastic opportunity to invest in the agricultural sector and the Riverina regional community,” Mr Shapiro said.
Riverina Fresh has been producing milk, cream and yoghurt products since 1922.
It is supplied by about 20 dairy farms in southern NSW, whose contracts will continue under the new management.
Riverina Fresh milk has developed a reputation as Australia’s leading coffee milk brand, and is widely regarded by baristas and roasters alike.
Rob Collier, who will remain as CEO of the Wagga business, said Blue River’s investment in Riverina Fresh would help the niche brand flourish.
“The company is committed to the ongoing success of the Wagga Wagga business, the sustainability of the dairy industry, and the broader regional community,” he said.
Fonterra, meanwhile, has pointed to its recent investment in supporting its cheese and spread brands – Western Star, Perfect Italiano and Mainland, and the Bega brand, which is marketed via Fonterra’s distribution network.
It has also launched NZ’s powerful Anchor brand in Australia.
“In the past 12 months, we’ve commissioned a multi-million beverages plant in Cobden, creating over 50 local jobs; secured new long-term customers for our nutritionals plant in Darnum including Bellamy’s Organics as well as entering into a joint venture agreement with Beingmate; and we’re building a new state-of-the-art cheese plant in Stanhope which is on track for completion mid-2017,” Mr Dedoncker said.
“These initiatives have laid the foundation for a strong sustainable business that is profitable for the long-term and well-positioned to pay our farmers the best possible milk price in a competitive global market.”
