Fonterra purchase puts icing on foodservice cake

Fonterra has bought a big Auckland bakery and hopes to boost business by adding a dollop of dairy to pastries and croissants in Australia and Asia.

Bulk bakery The Pastryhouse makes frozen croissants and danish pastries which it sells to supermarkets, hotels and other foodservice customers, including casinos in Las Vegas.

Neither party would disclose the purchase price or the bakery's turnover. However, Fonterra global foodservice director George Zoghbi said the acquisition would speed growth in the dairy giant's foodservice business.

"For us it's not a major transaction ... it's more like a stepping stone to that lucrative, high-value dairy-related product in the ready-to-use segment for food service."

High labour costs and scarce skills in the hospitality industry were driving demand for value-added products, he said.

"Some of the opportunities we will explore include augmenting the company's [Pastryhouse's] products with dairy-based fillings and re-branding as Anchor in Asia," Zoghbi said.

Fonterra has earmarked Pastryhouse for growth in Australia and Asia following the acquisition. Fonterra said the bakery would gain an advantage from the dairy company's presence in these regions and its ability to supply butter ingredients.

Pastryhouse was bought through Fonterra subsidiary Tip Top, whose expertise in manufacturing and distributing frozen food made it a natural home for the bakery, Zoghbi said.

Robert Heeps, managing director and shareholder in Pastryhouse, said the bakery had a close relationship with Fonterra as an ingredient supplier. The sale to Fonterra would give it the resources needed to develop international markets.