The sale ends Fonterra’s 20-year Australian presence and reshapes dairy processing power across the region.
Fonterra has completed the sale of its Oceania assets to French dairy company Lactalis in a deal valued at NZ$3.8 billion, or approximately A$3.2 billion. The transaction, first announced seven months ago, marks the end of Fonterra’s two-decade presence in the Australian dairy industry and transfers major consumer brands including Mainland, Western Star and Perfect Italiano to Lactalis.
The acquisition significantly strengthens Lactalis’ footprint in Australia and the wider region. Along with the transfer of well-known dairy brands, Lactalis will take ownership of 16 manufacturing facilities located across Australia, New Zealand, Sri Lanka, Malaysia, Indonesia and Saudi Arabia. Around 4,300 employees will also join the company, expanding Lactalis Australia’s operational scale and workforce.
The deal will further consolidate Australia’s dairy processing sector. Following the acquisition, Lactalis, Saputo and Bega are expected to control nearly 70% of the country’s dairy processing capacity. The concentration of market share has raised concerns among producers about competition and future processor relationships.
Australian Dairy Farmers president Ben Bennett said many dairy farmers are approaching the transition cautiously. He noted that Fonterra had built a strong and highly regarded relationship with suppliers, while some producers are uncertain whether Lactalis will maintain the same culture and level of engagement with farmers. According to Bennett, trust and close communication remain critical in the Australian dairy sector.
Fonterra said the divestment will allow the cooperative to return A$3.2 billion to farmer shareholders and unit holders through a capital return of NZ$2 per share. The company plans to focus future investment, research and farmer capital on its New Zealand-based global ingredients and foodservice businesses. Fonterra also confirmed it will continue working with Lactalis through a long-term supply partnership, while maintaining its FY26 earnings guidance of 50 to 65 cents per share.
Source: The Weekly Times – https://www.weeklytimesnow.com.au/dairy/dairy-giant-fonterra-ends-twodecade-australian-stint-with-sale-to-lactalis/news-story/e525df8ea73da3d042dde9f75114eebd?amp
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