Fontierra. So they’re on the road this week to talk to the stakeholders about the sale of its consumer brands. It’s either a trade sailor an IPO. If it sells, it involves names like Anchor and Mainland. Of course, as I mentioned earlier, comes off the back of the golden days and these big payouts for farmers. The Fontier boss, Myles hurls back with us, good morning.

Fontierra. So they’re on the road this week to talk to the stakeholders about the sale of its consumer brands. It’s either a trade sailor an IPO. If it sells, it involves names like Anchor and Mainland. Of course, as I mentioned earlier, comes off the back of the golden days and these big payouts for farmers. The Fontier boss, Myles hurls back with us, good morning.

Good morning.

Good morning.

You make on very broad issues. You must be congratulated. Does it feel at the moment as good as it looks?

You make on very broad issues. You must be congratulated. Does it feel at the moment as good as it looks?

Yeah? It does.

Yeah? It does.

I mean we’re out on farm this week, right across the country, both senior management and the board and out talking to farmers, and you know that they recognize where we’ve come from. And to be standing out there talking about their results for the six months. It does feel good, so good to be acknowledged in that way for a cross our team.

I mean we’re out on farm this week, right across the country, both senior management and the board and out talking to farmers, and you know that they recognize where we’ve come from. And to be standing out there talking about their results for the six months. It does feel good, so good to be acknowledged in that way for a cross our team.

And with the forecast two seasons, two good seasons coming and that’s unusual. Is there anything weird out there that’s happening or is this these just golden days?

And with the forecast two seasons, two good seasons coming and that’s unusual. Is there anything weird out there that’s happening or is this these just golden days?

Well, well, certainly nothing that hasn’t been communicated already. I mean, you see that some of the geopolitics at play and what’s going on in Ukraine and Ghasa or An everywhere else around the world, and so these things are worrias are on the back of our minds. A city, today’s supply demand is in pretty good shape, and so we take that in terms of the forecast we have for the season ahead.

Well, well, certainly nothing that hasn’t been communicated already. I mean, you see that some of the geopolitics at play and what’s going on in Ukraine and Ghasa or An everywhere else around the world, and so these things are worrias are on the back of our minds. A city, today’s supply demand is in pretty good shape, and so we take that in terms of the forecast we have for the season ahead.

But we also need to be mindful and our.

But we also need to be mindful and our.

Farmers have been through this business a number of years and we’ll be watching it closely at the same time we do.

Farmers have been through this business a number of years and we’ll be watching it closely at the same time we do.

Right, So to the consumer side of the equation, how exercised and energized? Is this discussion among you a lot?

Right, So to the consumer side of the equation, how exercised and energized? Is this discussion among you a lot?

Yes, there’s a lot of clarification questions that are coming from the floor, as you’d expect. I mean, it is a big decision that ultimately our farmers will make. So yeah, a lot, a lot of conversation, but it’s really around the why. Let to understand the why and what does the cop look like into the future. So that’s where the vast already questions are coming from. And it’s been a good conversation.

Yes, there’s a lot of clarification questions that are coming from the floor, as you’d expect. I mean, it is a big decision that ultimately our farmers will make. So yeah, a lot, a lot of conversation, but it’s really around the why. Let to understand the why and what does the cop look like into the future. So that’s where the vast already questions are coming from. And it’s been a good conversation.

Are you having to change minds?

Are you having to change minds?

No, not generally.

No, not generally.

I think people are walking in with just that that those questions around you know where we’re going as a corporative.

I think people are walking in with just that that those questions around you know where we’re going as a corporative.

We know we’ve come from.

We know we’ve come from.

It’s pretty clear we’re in a pretty good space as we stand here, but what does the future look like? So a lot of conversations around that, but but not not not not changing minds per SAE, but just as clarification.

It’s pretty clear we’re in a pretty good space as we stand here, but what does the future look like? So a lot of conversations around that, but but not not not not changing minds per SAE, but just as clarification.

Why don’t you see a future with the consumer side of the equation.

Why don’t you see a future with the consumer side of the equation.

We’re like any good business and it starts with a good strategy, know and where you are good at. And the returns for many years act you an ingredients business have been stellar right across the board. We have some ups and downs on the way that buying large returns are very good. Food service of the past of the five, six, seven years have done very very well, and we continue to see growth in that in that business. When you look at the consumer business and I heard you’re opening this morning, one hundred and seventy three million at a headline level looks okay. But what people lose sight of it’s three point four billion dollars of our farmer’s capital tied up in that business. And so that the effectively roads value day by day because it’s not getting the return on capital that our farmers have ultimately are seeking. So we can invest that business that cash back into construt into ingredients, back into food service, where we believe you get higher returns.

We’re like any good business and it starts with a good strategy, know and where you are good at. And the returns for many years act you an ingredients business have been stellar right across the board. We have some ups and downs on the way that buying large returns are very good. Food service of the past of the five, six, seven years have done very very well, and we continue to see growth in that in that business. When you look at the consumer business and I heard you’re opening this morning, one hundred and seventy three million at a headline level looks okay. But what people lose sight of it’s three point four billion dollars of our farmer’s capital tied up in that business. And so that the effectively roads value day by day because it’s not getting the return on capital that our farmers have ultimately are seeking. So we can invest that business that cash back into construt into ingredients, back into food service, where we believe you get higher returns.

Given that you’re a good company, why can’t you do what you would assume somebody else would do if they bought it off you.

Given that you’re a good company, why can’t you do what you would assume somebody else would do if they bought it off you.

Yeah, and look, you go to the supermarket here in New Zone and we have a very good presence. You look at the chillis space here and even on the dry shelf, we have a very good presence. But it’s sort of misunderstood that you get the international market, we don’t have that sort of presence. You know, we have very strong category control in certain areas, but they’re quite narrow categories. So if we wanted to really go in as scale and actually look at sort of spreading costs across a wider business, you probably need to go beyond Deary.

Yeah, and look, you go to the supermarket here in New Zone and we have a very good presence. You look at the chillis space here and even on the dry shelf, we have a very good presence. But it’s sort of misunderstood that you get the international market, we don’t have that sort of presence. You know, we have very strong category control in certain areas, but they’re quite narrow categories. So if we wanted to really go in as scale and actually look at sort of spreading costs across a wider business, you probably need to go beyond Deary.

You probably need to go alot beyond New Zealand Airy.

You probably need to go alot beyond New Zealand Airy.

You probably need to start thinking about confectionery and maybe chocolate and potentially back into ice cream to start to become a real consumer goods company in those markets. And we truly believe that’s not part of our expertise. We’ve been there before. We tried to get into some businesses were outside of our expertise in international markets and it took a number of years to try and turn that around. So, you know, focusing on what you’re good at, looking at the cash can you recycle and the things you’re good at, and we truly believe in those ingredients and food service, which is you know, by far better returning businesses over the long term. That for us is about value add and so that’s where we’re.

You probably need to start thinking about confectionery and maybe chocolate and potentially back into ice cream to start to become a real consumer goods company in those markets. And we truly believe that’s not part of our expertise. We’ve been there before. We tried to get into some businesses were outside of our expertise in international markets and it took a number of years to try and turn that around. So, you know, focusing on what you’re good at, looking at the cash can you recycle and the things you’re good at, and we truly believe in those ingredients and food service, which is you know, by far better returning businesses over the long term. That for us is about value add and so that’s where we’re.

Going to go and not just potentially a sale, but how you sell IPO or trade? Is that angsty as well.

Going to go and not just potentially a sale, but how you sell IPO or trade? Is that angsty as well.

Or not angsty?

Or not angsty?

But again, you know they’re wanting, they want in clarity now which way we’re going. But you know from ours we need to try both those channels and see where the best returns come from. So yeah, we’re going hard on that and we’d expect an update the next few months out to our shoeholders. But you’re going hard on both those venues. Both are very expensive to operate, but at the same time we think it’s the right thing to do.

But again, you know they’re wanting, they want in clarity now which way we’re going. But you know from ours we need to try both those channels and see where the best returns come from. So yeah, we’re going hard on that and we’d expect an update the next few months out to our shoeholders. But you’re going hard on both those venues. Both are very expensive to operate, but at the same time we think it’s the right thing to do.

Is there any value you’re placing as a company. And the I p O side of the equation about patriotism New Zealanders participating any of that or you’re just looking for the dollar.

Is there any value you’re placing as a company. And the I p O side of the equation about patriotism New Zealanders participating any of that or you’re just looking for the dollar.

No, certainly it does come into play.

No, certainly it does come into play.

But at the same time, and it has been a question from the floor around you know, social license and all that sort of sort of thing. But you know it’s no secret and again you mentioned it in you’re opening. You know, the team have done a pretty good job in getting New Zealand to to where we are economically. We’ve done our fearsue of lifting as farms, and so when it comes to you know, do we have a social license? I mean, it’s not the questions I get in the weekends. Most of they go through the price of butter and things that are outside of our control.

But at the same time, and it has been a question from the floor around you know, social license and all that sort of sort of thing. But you know it’s no secret and again you mentioned it in you’re opening. You know, the team have done a pretty good job in getting New Zealand to to where we are economically. We’ve done our fearsue of lifting as farms, and so when it comes to you know, do we have a social license? I mean, it’s not the questions I get in the weekends. Most of they go through the price of butter and things that are outside of our control.

So you know, I’d challenge it a bit. Far.

So you know, I’d challenge it a bit. Far.

Haven’t really had the recognition for what they do here in New Zealand.

Haven’t really had the recognition for what they do here in New Zealand.

It’s really really is.

It’s really really is.

There an education? But just on the butter got me going, Can you honestly tell me that most people don’t understand why they’re paying too much for butter as much as they hate paying too much. I mean, there’s a reason for it, and a good one, yeah.

There an education? But just on the butter got me going, Can you honestly tell me that most people don’t understand why they’re paying too much for butter as much as they hate paying too much. I mean, there’s a reason for it, and a good one, yeah.

There is.

There is.

And we’re dictated pretty much by the international market and then the retailers of news and the will set their own prices and now clearly there’s a bit in there for us in terms of efficiency and manufacturing costs and margins and those things.

And we’re dictated pretty much by the international market and then the retailers of news and the will set their own prices and now clearly there’s a bit in there for us in terms of efficiency and manufacturing costs and margins and those things.

But you know it is misunderstood clearly.

But you know it is misunderstood clearly.

But you know, at the same time it’s very hard to explain then in a twenty second crossover. So you know, we try our best, but it’s a non easy conversation.

But you know, at the same time it’s very hard to explain then in a twenty second crossover. So you know, we try our best, but it’s a non easy conversation.

It’s for sure.

It’s for sure.

When are we going to know whether you flick it and how you flick it?

When are we going to know whether you flick it and how you flick it?

Yeah, So the market guidance we’ve got out there at the moment, which we said in May last year we’d be twelve to eighteen month program and so you know we’re still sticking to that and so but the team are running hard.

Yeah, So the market guidance we’ve got out there at the moment, which we said in May last year we’d be twelve to eighteen month program and so you know we’re still sticking to that and so but the team are running hard.

We’ve just had the.

We’ve just had the.

Non deal road shows throughout as Asia, Paciffolk that they’ve just concluded, and then we’re expecting some non binding offers to come through on the trade sale side of are the next month or so, so you know, sitting with the next few months, we’ll be in have some clarity and then the real week.

Non deal road shows throughout as Asia, Paciffolk that they’ve just concluded, and then we’re expecting some non binding offers to come through on the trade sale side of are the next month or so, so you know, sitting with the next few months, we’ll be in have some clarity and then the real week.

Thanks all right, appreciate you time. Merrels Miles Hurrale Fontira CEO and just quickly the fit Farmers a note yesterday that they’re on board with the government a REMA reform announced this week. Chris Bishop with us by the way, later on in the program, difficult to get things done. The red tape and box sticking has become totally ridiculous. Reforms are on the right track, and so say all of us. For more from The Mic Asking Breakfast, listen live to news talks.

Thanks all right, appreciate you time. Merrels Miles Hurrale Fontira CEO and just quickly the fit Farmers a note yesterday that they’re on board with the government a REMA reform announced this week. Chris Bishop with us by the way, later on in the program, difficult to get things done. The red tape and box sticking has become totally ridiculous. Reforms are on the right track, and so say all of us. For more from The Mic Asking Breakfast, listen live to news talks.

It’d be from six am weekdays, or follow the podcast on iHeartRadio.