Kraft succeeds at last

Press, 12 November 1981, Page 21

Kraft succeeds at last

PA Auckland The huge multi-national food processing concern, Kraft Corporation of Chicago, has secured a firm foothold in New Zealand seven years after a previous overture was rebuffed, amid widespread controversy. Through its Australian subsidiary, Kraft Foods, Ltd, of Melbourne, the corporation has secured a 49 per cent interest in Butland Industries, Ltd, of Auckland, one of New Zealand's major food companies. The move, which is likely to mean more exports and increased overseas income for New Zealand, means that indirectly Kraft gains an entry to the New Zealand dairy industry. Butlands and the New Zealand Dairy Board each has a 50 per cent share in Dairy Industries, Ltd, a large-scale

cheese-processing plant established as a joint venture at Penrose in 1977. The new venture with Kraft was announced jointly by the • chairman of Kraft Foods, Ltd, of Melbourne (Mr I. McK. Milne) and the chairman of Butland Industries, Ltd (Mr J. M. Butland). It has been aproved by the Government through the Overseas Investment Commission. which is part of the Reserve Bank, and by the Dairy Board. The venture will involve processed cheese and a range of other New Zealand food products. It is expected to open up extensive new markets and, in the first full year of operation, to result in an additional $l5 million from cheese alone. The marriage of the two organisations has been negotiated smoothly and without

the widespread controversy which surrounded the unsuccessful Kraft bid in 1973-74 to gain a majority interest (60 per cent) in a Butland subsidiary. New Zealand Cheese, Ltd. Subject to some major modifications, the proposals in 1973-74 had a large measure of approval in the then Labour Government and in the Dairy Board. But widespread opposition arose among unions, in Federated Farmers, and in other sections of the dairy industry. Controversy raged for some months because the entry of a multi-national was seen by many as a threat to the co-operative structure of the New Zealand dairy industry and as a possible future threat to New Zealand control of its own dairy affairs. Finally, in April, 1974,

Kraft withdrew its bid and did not renew it. The then president of the corporation’s international division. Mr H. M. Connelly, said the corporation was not going to impose itself on a country in which it was not wanted. Meantime. Butlands has continued the cordial relations it has always enjoyed with Kraft. The essential difference in the new deal is that Kraft has secured a minority — not a majority — shareholding. Emphasising other points of difference Mr Butland said that, whereas in the previous proposal the Dairy Board had no part, the board now became a partner in the new venture through its 50-50 ownership of Dairy Industries, Ltd, with Butlands.