Tuesday, 28 August 2018 09:55

Anchor tops China milk sales

Written by  Sudesh Kissun
Fonterra Greater China president Christina Zhu in Auckland last week. Fonterra Greater China president Christina Zhu in Auckland last week.

Exactly five years ago Fonterra launched its first Anchor milk product in China, today it is sold in 13,000 stores in 220 Chinese cities.

A 250ml Anchor UHT milk produced at the Waitoa site went on a retailer’s shelf in Shanghai. This was followed by a joint online and offline push into the China market and today Anchor is the number-one consumer milk brand. 

Anchor UHT milk is also the online bestseller in China with 55% of total sales made online.

Fonterra Greater China president Christina Zhu, in Auckland last week to celebrate five years of Anchor milk brand in China, says Anchor now offers 47 products to consumers.

These include high value milk foods, organic milk, infant formula, fresh milk, butter and yoghurt.

Zhu says the 45% vs 55% offline/online sales mix is working well.

“A lot of fast moving consumer goods (FMCG) companies would kill for this mix in China,” she says.

Cumulatively 1 billion glasses of milk have been sold by Anchor in China since its launch.

Zhu says fighting for market share isn’t easy with 64 imported milk brands in China, but Anchor is proud to be retaining the number-one spot. Anchor sales have grown 40% year-to-year, not easy from a small base. She adds many FMCG companies are not growing in China.

“Some of the global FMCG brands are declining in China; the 40% plus growth is huge; in fact it makes a lot of people very jealous of us in China.”

Zhu pays tribute to her workforce; volume per person has increased seven times since 2014. “Things don’t fly off the shelf; in China it requires a lot of hard work.”

From day one e-commerce has been part of Anchor milk’s strategy and ‘genetics’ in China. Fonterra works with China’s two giant e-commerce retailers Alibaba and JD.com.

China’s internet usage is astounding -- 770 million internet users. Online sales last year topped US$812 billion, versus US$821b in the US, UK, Japan, Germany, Korea and France combined.

Own processing? 

Fonterra is pondering building plants in China for processing milk from its farms there.

Christina Zhu says third-party manufacturers now process fresh milk from the 28,000 cows on its two farming hubs; a third hub is being built with global food company Abbott.

““We have farms, we have a big downstream business and we need manufacturing capability. Right now, it’s done at a few carefully audited third-party sites and we have Fonterra people working on these sites fulltime to make sure the products are safe,” she said.

“There is a natural cap on how much you can do through third parties, so we’re assessing all the options, but we’re not in a position to say a definite timeline or make a commitment at this point.”

Fonterra’s greater-China sales are at least $5 billion; foodservice and ingredients make the most. But China farms have bled money over the years and Fonterra’s investment in food company Beingmate has turned sour.

Zhu says Beingmate gets a lot of attention but is a very small part of the total China business. “We are obviously disappointed; the business is not where we want it to be. But we are working closely with the new general manager to turn it around.”

More like this

Farmers' call

OPINION: Fonterra's $4.22 billion consumer business sale to Lactalis is ruffling a few feathers outside the dairy industry.

Wasted energy

OPINION: Finance Minister Nicola Willis could have saved her staff and MBIE time and effort over ‘buttergate’ recently by not playing politics with butter prices in the first place.

Featured

Dr Mike Joy says sorry, escapes censure

Academic Dr Mike Joy and his employer, Victoria University of Wellington have apologised for his comments suggesting that dairy industry CEOs should be hanged for contributing towards nitrate poisoning of waterways.

People-first philosophy pays off

The team meeting at the Culverden Hotel was relaxed and open, despite being in the middle of calving when stress levels are at peak levels, especially in bitterly cold and wet conditions like today.

Farmer anger over Joy's social media post

A comment by outspoken academic Dr Mike Joy suggesting that dairy industry leaders should be hanged for nitrate contamination of drinking/groundwater has enraged farmers.

From Nelson to Dairy Research: Amy Toughey’s Journey

Driven by a lifelong passion for animals, Amy Toughey's journey from juggling three jobs with full-time study to working on cutting-edge dairy research trials shows what happens when hard work meets opportunity - and she's only just getting started.

National

Machinery & Products

JDLink Boost for NZ farms

Connectivity is widely recognised as one of the biggest challenges facing farmers, but it is now being overcome through the…

New generation Defender HD11

The all-new 2026 Can-Am Defender HD11 looks likely to raise the bar in the highly competitive side-by-side category.

» Latest Print Issues Online

Milking It

Buttery prize

OPINION: Westland Milk may have won the contract to supply butter to Costco NZ but Open Country Dairy is having…

Gene Bill rumours

OPINION: The Gene Technology Bill has divided the farming community with strong arguments on both the pros and cons of…

» Connect with Dairy News

» eNewsletter

Subscribe to our weekly newsletter