A report from Reuters announced that Nestlé and Fonterra are potentially eyeing strategic options for their Dairy Partners Americas (DPA) joint venture in Brazil. These options include a potential sale.
Both companies announced in a statement the review of options should ensure the long-term growth and success of the DPA business that had sales revenue of US$247.5 million in 2018. The review is set to take place by the end of 2019.
Over the last few months, Nestle has taken to streamlining its portfolio, shedding some underperforming businesses such as its lunchmeat business under the Herta brand.
Fonterra, too, is working on streamlining its operations. The dairy company recently announced that it was closing its western Victorian, Australia, factory. The Dennington plant, which opened in 1911, will be shut down later this year. The closure affects nearly 100 jobs.
“The Australian ingredients business continues to feel the impact of the drought and other significant changes that mean there is excess manufacturing capacity in the Australian dairy industry,” Miles Hurrell, Fonterra CEO, said in a statement reported on by Yahoo Finance. "This is not a one-off for this season, it's the new norm for the Australian dairy industry and we need to adapt. With the reduced milk pool in Australia, we must put it into our highest returning products and most efficient assets.”
Will Nestle and Fonterra continue to cast off underperforming operations? Deli Market News will report.