South African Clover proves to be tempting for Fonterra

Fonterra has formed a $100 million joint-venture company with South Africa's largest dairy group, Clover.

The new venture will develop dairy ingredients-related opportunities in sub-Saharan Africa.

First mooted last August, the venture was approved by South Africa's Competition Tribunal last week.

Clover Fonterra Ingredients (CFI) will handle the marketing of bulk dairy ingredients, mainly milk powder.

A Fonterra spokesman said the company was expected to have initial sales of about 35,000 metric tonnes a year and revenue of US$75 million ($106 million).

Clover, which processes about 30 per cent of South Africa's milk, is owned by about 800 supplier shareholders and employs more than 6000 staff.

It had revenue of about $850 million last year.

CFI will also manufacture ingredients under contract and supply food service products to nominated quick-service restaurants throughout the sub-Saharan region.

The new company will be headed by Clover executive Pieter Uys, who will report to a board of directors made up of Fonterra and Clover executives.

Fonterra (South Africa) general manager Malcolm Tweed said CFI would give customers a broader product range with greater security of supply and an enhanced product development capability.

The integration of Fonterra and Clover's processes would play a big part in achieving this.

Fonterra sells about $11 billion of products globally.

Its 2002 annual report shows South Africa and Nigeria were the company's biggest sub-Saharan markets, with sales of between $50 million and $100 million each.

Fonterra already has a sizeable joint-venture agreement with Nestle, covering Latin America. But that venture focuses on high-value consumer products.

In the dairy

* Clover is South Africa's largest dairy company.
* It processes about 30 per cent of the country's milk, mainly for the retail market.
* It is owned by about 800 supplier shareholders and employs more than 6000 staff.
* Last year, Clover posted revenue of about $850 million.