Fonterra and Nestle plan Chile joint venture

Dairy co-operative Fonterra and Nestle are planning a joint venture for chilled and liquid dairy products in Chile by combing their local subsidiaries, Soprole and Nestle Chile.

The joint venture will manufacture, retail and distribute liquid milks, yoghurts, desserts, fruit juices, cheese, cream, butter and margarine in Chile, Nestle said yesterday.

Not included in the proposal will be other aspects of the two companies' dairy businesses, such as powdered milk, condensed milk and dairy ingredients, products for export and non-dairy products.

Soprole and Nestle Chile will each hold 50 percent of the new company, DPA Chile.

DPA Chile will be part of the two companies' alliance established in 2002, Dairy Partners Americas, which operates 13 manufacturing sites across Brazil, Argentina, Venezuela, Colombia and Ecuador.

Soprole employs about 1800 staff and is Chile's top consumer dairy foods company. The Chilean operation accounts for about 5 percent of Fonterra's total revenue.

Chilean competition authorities were considering the proposed joint venture, which was also subject to regulatory approval.

"We are excited about the prospect at expanding the DPA alliance to Chile," said Nestle's executive vice-president Luis Cantarell.

"DPA Chile will leverage on the capabilities and strengths of both Nestle Chile and Soprole to further develop the dairy market in Chile. It is a sign of our commitment to the chilled and liquid dairy category in Latin America," he said.

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