Synlait Milk inks new higher volume supply deal with Bright Dairy
By Tina Morrison
Feb. 14 (BusinessDesk) - Synlait Milk, the NZX-listed dairy company, has inked a new five-year supply agreement for increased volumes of packaged infant formula with its cornerstone shareholder Bright Dairy.
The agreement builds on previous supply arrangements put in place since the relationship began in 2011 and targets a fourfold increase from current volumes over the five-year term, Rakaia-based Synlait said in a statement.
The deal provides both companies with certainty around production volumes for Bright Dairy's flagship infant nutrition brand Pure Canterbury, which is sold through online and traditional channels in China. It will also help underpin Synlait's application to register Pure Canterbury with the China Food and Drug Administration as part of stricter rules aimed at lifting China's food safety standards.
"This new agreement is a positive step in our long standing partnership and we're looking forward to playing a key role in the future success of Bright Dairy's infant formula business," said Synlait managing director John Penno. "The shareholder dynamic is something we share with a number of our customers and it fosters a close relationship that focuses on the medium to long-term success for everyone involved."
China's Bright Dairy is Synlait's largest shareholder with a 39.4 percent stake. Other infant nutrition customers with a strategic shareholding include NZX-listed The a2 Milk Company and US-based Munchkin Inc.
Synlait shares last traded at $6.61 and have gained 112 percent over the past year.