What Would Synlait Be Worth to Fonterra or a2 Milk?
Speculation of a possible joint move by Fonterra and a2 Milk to buy Synlait raises a much bigger strategic question, says agribusiness expert Dr Nic Lees.
The Mainland Sweet Cinnamon Spreadable Butter landed on supermarket shelves last month and has since clocked up a viral rate of likes, shares, and views, taking social media - and sales expectations - by storm, according to Fonterra Oceania. The innovative spread is infused with a blend of cinnamon and sugar. It marks the first time Fonterra's brands in Australia have ventured into sweet butters under the premium Mainland brand, with a focus on adding flavour to breakfast.
Fonterra Oceania includes the co-op's brand business in New Zealand and the Australian operations. Fonterra is looking at full or partial divestment of its Oceania business as part of "a step-change in strategic direction" announced two months ago.
Fonterra Oceania's senior brand manager for Mainland, Caroline Stedman, said the activity around Sweet Cinnamon on social media continues to trend, with engagement in the tens of thousands of likes, downloads, and shares.
"One video on TikTok has been viewed more than half a million times, which kicked off sales that are now well above forecast," she says.
"In fact, they're five times higher than the initial planned run rate, by far exceeding our expectations for the launch and demonstrating the power of social media."
Stedman notes that breakfast is a daily habit for most people, and dairy plays such a significant role in it.
"Think butter on toast, milk in your coffee or with cereal. So, we looked at breakfast and thought 'how can we make it more exciting? How can we inspire people to add more flavour and excitement to their breakfast with something they use each day, like butter?' That's where the idea for Sweet Cinnamon grew."
Sweet Cinnamon started as a concept in Fonterra's innovation pipeline two years earlier, with shopper insights and consumer trends driving the initial concept into production.
"Our insights were telling us consumers were increasingly prioritising taste and convenience. They're looking for something extra that adds a hit of flavour to their food," says Stedman.
"Leveraging the strength of the Mainland brand, it was the perfect opportunity to extend our portfolio of flavoured spreads with a sweet one," she added.
The journey from an idea to the dairy shelf is a meticulous one, beginning with a simple concept supported by a specific consumer need or occasion.
Fonterra's innovation and technical teams take a lead role throughout the production process, carefully testing and trialling the product to perfect its final form.
Fonterra Oceania senior development technologist, Liz Kitchen says the process starts with numerous samples where the product starts to take shape.
"It all starts in the onsite applications kitchen by experimenting and building prototypes, using different butter blends, flavours, and textures," she explained.
The product then undergoes rigorous trials and sensory testing.
"At each of these steps, we receive constructive feedback on the flavour profile and mouth feel. With Sweet Cinnamon, the product you see on shelves today is the result of trialling 27 unique formulations until we achieved the optimal combination. This highlights the extensive technical process and the importance of consumer feedback when working on a new product," Kitchen says.
