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Nestlé and Fonterra Sign Agreement on Dairy Alliance for the America

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Following their August 2001 announcement, Nestlé S.A. and New Zealand's Fonterra Co-operative Group Ltd. today announced the formal creation of Dairy Partners Americas (DPA). The agreement was signed at Christchurch (New Zealand) by Mr. Carlos E. Represas, Executive Vice President, Nestlé S.A., and Mr. Craig Norgate, Chief Executive Officer of Fonterra.

The alliance intends to implement in the Americas a number of joint ventures in the dairy field, subject to regulatory approval and other clearances. The joint ventures will cover a wide range of dairy products, including shelf stable as well as chilled refrigerated milk foods and beverages under existing brands of the two partners. Infant formula, evaporated and condensed milks, certain speciality products, cheese and butter are not covered by the alliance. The joint ventures will be managed by senior executives from both founding partners, reporting to a joint supervisory board of six members co-chaired by Messrs. Craig Norgate and Carlos E. Represas.

The partners expect significant benefits from their alliance, especially in the following areas: combined sales growth in existing and new markets, optimization of capital expenditures through optimal use of each others' assets, cost efficiency through the use of their respective infrastructures, better use of resources in distribution, manufacturing strengths and research and development, as well as purchasing synergies. Furthermore, the two partners expect a favorable development of the quantity, quality and costs of fresh milk through the development of state-of-the-art dairy farming practices in host countries, making an important contribution to the development of fresh milk production in Latin America and thus to the improvement of the total earnings of farmers.