Fonterra Co-operative Group Limited is a New Zealand multinational publicly traded dairy co-operative owned by New Zealand farmers. The company is responsible for approximately 30% of the world's dairy exports and has revenue exceeding NZ $22 billion, making it New Zealand's largest company. It is the sixth-largest dairy company in the world as of 2022, as well as the largest in the Southern Hemisphere.See list of world's largest dairy companies; all of the companies listed as bigger than Fonterra are owned by countries in the Northern Hemisphere.
Fonterra was established in October 2001 following the merger of the country's two largest dairy co-operatives, New Zealand Dairy Group (NZDG) and Kiwi Cooperative Dairies, with the New Zealand Dairy Board. The name Fonterra comes from Latin , meaning "spring from the land".
History
Background The first dairy co-operative in New Zealand was established in Otago in 1871. By 1920, there were 600 dairy processing factories of which about 85% were owned by co-operatives. In the 1930s there were around 500 co-operativesPhilpott, H.G. (1937). A History of the New Zealand Dairy Industry: 1840–1935. Government Printer: Wellington but after World War II, improved transportation, processing technologies and energy systems led to a trend of consolidation, where the co-operatives merged and became larger and fewer in number.Ward, A.H. (1975). A Command of Cooperatives. The New Zealand Dairy Board: Wellington By the end of the 1990s, there were only four co-operatives nationwide: the Waikato-based New Zealand Dairy Group, the Taranaki-based Kiwi Co-operative Dairies, Westland Milk Products, and Tatua Co-operative Dairy Company.
Formation Fonterra was formed in 2001 from the merger of the two largest co-operatives, New Zealand Dairy Group and Kiwi Co-operative Dairies, together with the New Zealand Dairy Board, which had been the marketing and export agent for all the co-operatives. Fonterra effectively has monopsony control of the New Zealand domestic and export dairy industry. The merger was initially turned down by the New Zealand Commerce Commission, but later approved by the New Zealand Government, with subsequent legislation deregulating the dairy industry, allowing for the export of dairy products to be undertaken by any company. The two smaller co-operatives, Tatua and Westland (which would later be acquired by Yili Group in 2019), did not join Fonterra, instead remaining independent.
The company has an annual revenue of around NZ$22 billion. Its core business consists of exporting dairy products under the NZMP brand (95% of its New Zealand production is exported). It also operates a fast-moving consumer goods business for dairy products, Fonterra Brands. Fonterra has a number of subsidiaries and joint-venture companies operating in markets around the world.
International expansion In 2005, the company purchased a large factory in Dennington, Victoria, Australia, from Nestlé, after it moved out of the collection of milk from farmers and the manufacture of powdered milk in Australia. Also in 2005 the company made moves towards purchasing Australian companies Dairy Farmers and National Foods. It also converted its 50 per cent stake in Victoria dairy producer Bonlac to full ownership. At this time $1 billion of Fonterra's revenue was from Australian sales, which was 14 per cent of the dairy products it sells around the world.
In June 2008, the company acquired the yoghurt and dairy dessert business of Nestlé Australia, which it on-sold to Parmalat Australia in December 2015.
In 2010, leaked US embassy cables suggested New Zealand had only sent troops to Iraq in 2003, following the initial invasion, so Fonterra would keep valuable Oil for Food contracts. New Zealand was not a member of the coalition which supported invasion of the country, but later sent combat engineers for mine clearance and other such tasks.
In 2025, Lactalis agreed to buy the consumer unit of New Zealand’s Fonterra Co-operative Group for an amount of NZ$3.85billion. This deal would include Fonterra’s consumer brands such as Anchor, Mainland, and Anlene in the Asia Pacific.
Asset sales and divestment In 2019, the Tip Top ice cream brand was sold for NZ$380 million to Froneri, a global joint venture between Nestlé and PAI Partners.
In September 2019, Fonterra agreed to sell its 50% stake in DFE Pharma for NZ$633 million ($400.37 million).
In late February 2022, Fonterra suspended exports to Russia in protest of the 2022 Russian invasion of Ukraine. The company had exported NZ$240 million worth of produce to Russia in 2021. On 21 March, Fonterra closed its office in Moscow and withdrew from its joint venture with Russian company Unifood.
In mid May 2024, Fonterra announced plans to sell its global consumer business as part of a shift towards becoming a global business-to-business supplier of dairy nutrition products. The company's consumer business brands included Anchor, Mainland, Kapiti, Anlene, Anmum, Fernleaf, Western Star, and Perfect Italiano; which comprise 15% of the co-op's total milk solids. Other brands affected by the proposed divestment include its subsidiaries Fonterra Oceania and Fonterra Sri Lanka. In addition, the divestment could affect Fonterra's 17 manufacturing sites including three facilities in New Zealand.
On 11 November, Fonterra confirmed that it would be selling its consumer brands including Anchor, Mainland, Kāpiti, Anlene, Anmum, Fernleaf, Western Star and Perfect Italiano. The company also confirmed that it would sell its subsidiaries Fonterra Oceania and Fonterra Sri Lanka, as well as its 17 manufacturing sites including its three New Zealand facilities.
On 29 April 2025, Fonterra confirmed plans to close its Hamilton canning and packing facility in July 2025, affecting 120 jobs.
In August 2025, Fonterra agreed to divest its consumer business operations, that include brands such as Anchor, Mainland, and Anlene, to Lactalis for . In mid-October 2025, New Zealand First leader and Foreign Minister Winston Peters issued an open letter to Fonterra shareholders, urging farmers to vote against selling Fonterra's brands to Lactalis for short-term profits on the grounds that it would tarnish these brands' reputations.
Fonterra Research and Development Centre
In 1927 the New Zealand Dairy Research Institute (NZDRI) was founded in Palmerston North as part of the Department of Scientific Industrial Research, which was renamed to the Fonterra Research and Development Centre (FRDC) when Fonterra was formed in 2001. FRDC is purportedly one of the largest dairy research centres in the world, and as of 2019, it hosts several hundred engineers, scientists and researchers and holds 350 milk related patents. A large number of technologies involving whey, casein, lactoferrin, nisin, anhydrous milk fat, as well as cheesemaking and milk powder production have been developed at the centre.
FRDC has a substantial library of over 100,000 cheese starter cultures, which began in the 1930s under Hugh Whitehead. The centre has pioneered research on bacteriophages; in 1935 a bacteriophage was identified as the cause of failure in cheese starter isolates, and in 1992 the centre sequenced the genome of bacteriophage c2, which was the first whole genome to be sequenced in New Zealand.
Corporate structure Governance John Roadley was the inaugural chairman of Fonterra's board. He foreshadowed his resignation in August 2002 and was succeeded, after the next annual general meeting, by Henry van der Heyden. Van der Heyden held the chairmanship until December 2012. John Wilson succeeded van der Heyden and announced his resignation in July 2018 due to illness (he died in January 2019 aged 54). John Monaghan succeeded Wilson. In March 2020, he foreshadowed that he would step down in November 2020. In June 2020, Peter McBride was announced as Monaghan's successor.
Name Portrait Start End
Subsidiaries Fonterra Brands – consumer goods business NZMP Ingredients – global ingredients business Fonterra Global Dairy Trade – dairy ingredients supplier to the globally traded market Anchor Food Professionals – foodservices supplies Fonterra Group Manufacturing – food processing and manufacturing operations Fonterra Milk Supply – collection and distribution of milk from farms Shared Services – finance, communications, M&D, human resources, strategy and information services Farm Source (formerly RD1) – is a wholly owned rural retail and farmer support supplier. RD1 was formed at the end of 2001 through the merger of RD1.com and the Town & Country Agri-centres, Fonterra's two rural supply companies. In 2014, Farm Source was launched as a new brand platform for RD1 and provides retail benefits including Farm Source Rewards. Farm Source is also the farmer support business unit, with Area Managers, Sustainable Dairying Advisors and Technical Sales Representatives providing on-farm tools and advice for farmers, such as Farm Environment Plans. Farm Source is New Zealand's largest retailer of agricultural supplies to dairy farmers. There are 66 Farm Source stores across New Zealand as well an online ecommerce offer.
Changes to capital structure
In November 2007, the board of directors announcedFonterra announces start of Capital Structure consultation programme , Media release, Fonterra website, November 2007. a two-year consultation programme regarding their preferred capital re-structuring option: putting the business operations in a separate publicly listed company, with the co-operative maintaining a controlling interest. The aim was to give more access to funds for global growth.
Praised by some'Fonterra listing a win-win-win situation' , Brian Gaynor, Milford Asset Management website, retrieved 11 June 2008. as a bold move which would allow better access to outside capital, the proposals encountered significant opposition from both farmer shareholders and the government (who would be required to pass enabling legislation). Despite including a range of safeguards, farmers were clearly concerned at the risk of losing control; in what was sometimes described as a demutualization.
The board responded in 2008 by shelving the November 2007 proposal and continuing consultation and discussion with farmer shareholders. In September 2009, the board announced a three-step process to revamp Fonterra's capital structure. The new approach abandoned thoughts of a public listing of Fonterra shares and retained 100% farmer control and ownership of the co-operative.
A key goal of the capital structure changes was to stop large amounts of money washing in and out of Fonterra's balance sheet each year as milk production fluctuates. Under the previous structure, farmers matched their shareholding with their milk production by owning one co-operative share for each kilogram of milksolids (kgMS) produced annually. If their milk production dropped in any season, they could redeem shares back to the co-operative, which was required to buy the shares back off them. Consequently, Fonterra faced the risk of losing large amounts of share capital through redemptions during times of declining milk production. For instance, after milk production fell during the 2007/08 drought, Fonterra had to pay out $742 million of share capital to farmers via redemptions.
The capital structure changes also sought to provide greater incentives for farmers to increase their investment in Fonterra shares, helping ensure Fonterra has sufficient share capital to fund profitable business opportunities and drive a higher payout to dairy farmers.