Almost at the same time as reaching a momentous 10-year supply deal with Coles supermarket group and expanding its processing facilities, Australia’s largest dairy co-operative Murray Goulburn Co-operative Co. Limited (Murray Goulburn) announced on 18 April 2013 that it had acquired an additional 1.2 million shares in dairy producer Warrnambool Cheese and Butter Factory Holdings Limited (WCB).

This takes Murray Goulburn’s shareholding to a 14.5 per cent stake in WCB.

Australian Food News reported in November 2010 that Bega Cheese had acquired a similar-sized stake in WCB.

The respective shareholding investments by Murray Goulburn and Bega signal that WCB may become the first processing domino that might fall if there is to be a consolidation of Australia’s larger milk processors.

“The acquisition of these additional shares and the increase in our stake to 14.5 per cent is a reconfirmation of Murray Goulburn’s commitment to its long-term investment in WCB,” said Gary Helou, Murray Goulburn Managing Director.

While business analysts speculated that the increase in investment could be a move towards an eventual takeover of WCB by Murray Goulburn,  Mr Helou said that is not currently the Company’s intention.

“This is a strategic investment and there is no current intention to make a takeover offer for WCB, nor do we currently seek Board representation,” Mr Helou said.

Murray Goulburn said it was willing, for a limited period of time, to acquire additional shares in WCB at the same price as paid for the latest increase, but that it was “satisfied” with its 14.5 per cent stake.

WCB Company Secretary Paul Moloney said in a statement on Friday 18 April 2013 that the Company was not aware that Murray Goulburn had intentions other than those set out in the announcement of the investment increase to 14.5 per cent.

Australian Food News reported in April 2010 that any takeover bid for WCB  would need to be subject to approval by the Australian Competition and Consumer Commission.

WCB outlook ‘challenging’

Meanwhile WCB has announced that it expects its net profit in the 2013 financial year to be at least 80 per cent below last financial year.

Subdued international commodity prices, the continuing high Australian dollar and ongoing competition in the raw milk market keeping upward pressure on prices paid to milk suppliers mean the full year outlook remains challenging, according to a statement from WCB.

The Company said that it did expect the situation to improve in the 2014 financial year, as a result of recent implementation of various strategic strategies, including product mix changes and joint ventures with other dairy brands and processors. Australian Food News recently reported that WCB had contracted to manufacture both a cream cheese and a premium low-fat cheese for Kraft Foods under Kraft’s international brand.

Fonterra appoints some new directors

Meanwhile,  the regional milk giant NZ-based Fonterra Co-operative Group Limited (Fonterra) announced on 19 April 2013 the appointment of Judith Swales to the new role of Managing Director Australia.

Ms Swales was previously Managing Director of Heinz Food Australia, and prior to that was the Chief Executive Officer and Managing Director of Goodyear Dunlop. She has also held senior corporate roles with booksellers Angus & Robertson and WH Smith (UK). Ms Swales started her career in the food division of UK department store Marks & Spencer.

“I am confident Judith can provide leadership to accelerate the turnaround of our Australian business,” said Theo Spierings, Fonterra CEO. “Judith has been credited with leading successful turnarounds and generating extremely strong business results. She has extensive experience across retail, sales, marketing and manufacturing operations, together with a strong track record in developing talent and building leadership within businesses,” he said.

Ms Swales said that she sees “tremendous opportunity” in Fonterra’s business.

“It’s no secret that the Australian food manufacturing sector is facing some tough challenges,” Ms Swales said. “Fonterra has invested in a complete farm-to-consumer supply chain in Australia, has good relationships with farmer suppliers and customers, and the best dairy know-how in the world. As I see it the challenge is to get even closer with our customers and consumers and really understand how we can deliver to them the next big thing in dairy,” she said.

In March 2013, Australian Food News reported that the Australian arm of Fonterra’s business had seen a drop in earnings.

Ms Swales will start in her new role at Fonterra on Wednesday 24 April and will be based in the Company’s Australian headquarters in Melbourne’s Mount Waverley.

Fonterra also announced the appointment of a new Director, Simon Israel, following the retirement of Ralph Waters.

Mr Israel, a Singaporean who is currently Chairman of Singapore Telecommunications and a Director of Capitaland, one of Asia’s largest real estate companies, will join Fonterra’s Board from 1 May 2013.

Mr Israel was an Executive Director of the Singaporean government-associated investment firm Temasek Holdings for six years, and from 2010-2011 was Executive Director and President. He has previously been involved with some of the best known consumer goods companies as an Executive or Board Director, including ten years with French dairy company Group Danone, where he led the building of the business across the Asian region, especially in China.