New Zealand dairy giant Fonterra has announced binding agreements with both Nestlé Australia and Regal Cream Products (Bulla Dairy Foods) to sell its Australian ice cream business.

The world’s largest dairy exporter will sell the Peters brand in Western Australia and the Connoisseur ice cream brand to Nestlé, while Bulla will acquire the license to manufacture and market the Cadbury ice cream range in Australia. The decisions have reportedly been made to save the more profitable Browne’s milk business.

Nestlé will integrate the production of the Peters and Connoisseur brands into its national ice cream business from June 29, with all manufacturing consolidated in its Mulgrave facility in Victoria.

Fonterra Australia New Zealand Managing Director, John Doumani, indicated that the sale of the Peters brand in WA made strong business sense given Nestlé’s control of the brand across the other states of Australia.

“Given Nestlé own the Peters brand in all states except Western Australia, they are the logical owners of the brand in Western Australia and the decision to sell the Peters brand to Nestlé ensures Peters remains a strong vital brand in Western Australia,” he advised. “Nestlé has the required scale, synergies and expertise to invest in both the Peters and Connoisseur brands to continue to position them as strong leadership brands in the ice cream category.”

Fonterra’s remaining ice cream business in Western Australia will be sold to Bulla.

The Bulla arrangements will eventually see Bulla producing the Cadbury ice cream brand in its Victorian facilities. In the interim, Fonterra’s Balcatta site in Western Australia will continue to produce this range.

As a result of the sale of its Australian ice cream brands, potentially up to 140 positions will be made redundant at Fonterra’s Balcatta site in Western Australia.

“We regret the impact these decisions will have on our people and we are doing everything possible to minimise the number of people affected by this announcement, including pursuing redeployment opportunities within Fonterra and employment opportunities with other companies,” Mr Doumani said. “We have in place a comprehensive program to assist impacted employees, including outplacement support and counselling.”

Fonterra’s New Zealand ice cream business, Tip Top, and its remaining West Australian dairy business are unaffected by this announcement, the company advised.

Both agreements remain subject to regulatory approval.

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