With a reported loss of more than $590 million and no dividends for shareholders this coming year, how did Fonterra get this far down? Is the cooperative a victim of its own size, past success, structure or strategy?

In a recent interview on Radio NZ, TDB Director Phil Barry discusses our take on the issue, in light of the findings in our annual Dairy Companies Review and our review of Fonterra’s long-run financial performance. A recurring theme we identify in the dairy industry has been the success of companies that focus on their core business. A2 at the value end of the chain has seen a 21% increase in share price over the last 18 months, while Synlait (with a focus on ingredients) has seen a 23% share price rise. Fonterra’s strategy of competing across all levels of the value chain, both internationally and domestically, has seen a 40% share price drop. Is it time for Fonterra to assess which of its guns is biggest and stick to it?