Milk NZ managing director Terry Lee says a stock exchange listing will give Kiwi dairy farmers who are currently in co-operatives different options for supply and ownership.
“The benefit for the New Zealand dairy farmer is that we will have more and more consumer products and we will be able to pay a premium for high protein milk and A2 milk.”
Milk NZ was setup after Chinese billionaire Jiang Zhaobai’s vehicle Shanghai Pengxin bought the Crafar farms in April 2012. It has since expanded to be one of the largest dairy farm groups in New Zealand, managing 29 farms milking 30,000 cows on 12,000 ha, producing around 10m KgMS each year. Milk NZ exports UHT and fresh milk to China under the Theland brand. Its export products are manufactured by Miraka and found in at least 25 Chinese provinces and carried in 4700 stores. “We have expanded very rapidly online and through TV shopping channels,” says Lee. “Our business model of partnering with supermarket giants has led Theland to being the fastest-growing New Zealand brand in China.
“Currently Theland covers 60 per cent of the consumer market and has become the number one selling imported UHT brand in the stores that carry Theland.”
In 2015, Jiang restructured his company. Shanghai Pengxin now has 55 per cent of publicly listed Hunan Dakang International Food and Agriculture which holds the interest in Milk NZ.
The initiative to export fresh milk was driven by Theland New Cloud (Shanghai) Digimart, which was formed in 2015 as a subsidiary of Hunan Dakang and minority shareholders.
In December 2017, the Alibaba Group and founder Jack Ma’s venture company injected fresh capital into the TheLand New Cloud, emerging with a 57 per cent controlling stake.
Hunan Dakang remains a shareholder of TheLand New Cloud with 33 per cent, and minority shareholders retain 10 per cent. In turn, Theland New Cloud now has 100 per cent of the shares of Milk New Zealand Dairy.
If the listing goes ahead, Milk NZ will be following in the footsteps of Synlait Milk which listed with the backing of major Chinese shareholder Bright Dairy.
Lee says the company’s head office will be in New Zealand. But it has ambitions not just to be a dairy company but a multinational, bringing in more premium products from other countries including Australia and New Zealand, America, Europe and Germany. The NZ-based company will supply five categories to Alibaba as part of its “new retail” strategy — meat, fruit, water, dairy and grains.
“Our growth target is to double our revenue every year over the next three years to a target of 3 billion RMB,” says Lee.
“Currently we are at 700m RMB.”
Restructuring the company’s supplier and production relationships in New Zealand is key to stable growth. “One of the ideas we offer is options for our key suppliers to own shares in our company,” explains Lee. “This is in the early stage of discussion. But it may be the future for securing suppliers and to bring confidence into New Zealand … our partners not only enjoy the new sales opportunities but the opportunity to share capital for growth.”
Lee says the Alibaba relationship has already enabled Milk NZ to better sell into the competitive China consumer market.
He is proud that Alibaba selected New Zealand for their first investment in content for their sales channel.
“We tried several times online but were not successful, that is why we needed support from Alibaba.
“Today, Alibaba has four groups working in our head office to help us setup the HR system, supply chain management system and help with accurate sales and accurate promotions to their A+ members.”
Lee explains that Alibaba not only has a large number of customers but it can provide access to its 15 million strong A+ customer group — those with 100,000 RMB expenditure in one year — to trial products.
Lee also revealed the company also plans to setup an Agrifood Fund to invest and help New Zealand producers to have new facilities, new technology, new knowledge and new equipment.
“The Agrifood fund will be established this year,” says Lee. “The name is Jack Ma’s decision.”
Source: NZ Herald