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Nestle, Fonterra reviewing strategic options of Brazil DPA venture could include a potential sale

Nestle, Fonterra

Nestle owns a 49 percent stake, while Fonterra holds the remaining 51 percent stake in their Brazil DPA joint venture

Swiss multinational food company Nestle and Fonterra, a New Zealand multinational dairy company said that they are reviewing strategic options for their Dairy Partners Americas (DPA) venture in Brazil. It could also include a potential sale of their respective stakes, Nestle said in its press release.

Nestle owns a 49 percent stake, while Fonterra holds the remaining 51 percent stake in the venture.

Currently, Nestle is streamlining its portfolio and has expanded several of its underperforming businesses, such as its skin health unit.

Both companies said in a joint statement that  “the long-term growth and success of the business.” The review is expected to be ready by the end of 2019.

In 2003, DPA was established by Nestle and Fonterra as a 50/50 joint venture. DPA reported an estimated sales of $247.5 million last year, Food Ingredients First reports. The DPA venture markets well-recognised brands such as Nestlé, Chamyto, Ninho, Chandelle, Chambinho, Neston and Molico among others in Brazil.

Last year, DPA Brazil and Danone was under the investigation scanner by local government authorities for alleged slave labour. The companies were on the verge of being included to Brazil’s Lista Suja, where they will be effectively barred from receiving credit in any private or public financial firms. With that, Nestle sped up its efforts in ‘industry-wide transparency’ by disclosing data on its commodities and suppliers.

Nestle plans to grow exponentially in Brazil and other foreign countries. It has allocated $99.66 million to innovation in the last five years, Reuters reports. The company is also seeking business partnerships outside of Brazil. Last year, it acquired a major stake in Terrafertil, an Ecuadorian firm selling organic plant-based foods.

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