Why Fonterra accepted defeat in the dairy aisle
OPINION: Fonterra's sale of its consumer dairy business to Lactalis is a clear sign of the co-operative’s failure to compete in the branded consumer market.
ExportNZ Auckland and Waikato (divisions of the Employers and Manufacturers Association) gave their top award to Fonterra Foodservice after the co-op earlier won the Westpac Exporter of the Year (total sales over $25 million) category.
There were 25 finalists in seven awards categories, sponsored by Air New Zealand Cargo.
Fonterra entered the award for the performance of its foodservice business, which has grown aggressively, especially in Asia, in recent years to cater for out-of-home outlets such as bakeries, cafes, restaurants, hotels and fast food chains.
“Everyone at Fonterra shares in this award: our farmers who produce the highest quality milk through to our people who develop new products and deliver them to customers worldwide,” Wilson says.
“Through innovation and new product development, Fonterra is adapting to rapid change in our key export markets.
“A fundamental part of our co-op’s strategy is to grow value by converting more of our milk into higher value consumer and foodservice products; to achieve this we have grown our foodservice business in line with our goal of $5 billion sales by 2023.
“Our foodservice business and R&D teams are creating products and technologies that go straight to... bakers, chefs and restaurant owners.”
In Asia particularly, Fonterra has seen rapid growth in its foodservice business as the urbanised middle class adopts a more western diet. Forty per cent of people in urban China now eat in a western fast food outlet once a week.
China is a very competitive dairy foodservice market where the world leaders are battling for commercial success, says Grant Watson, Fonterra’s global foodservice director.
“We are proud as a New Zealand exporter to be winning this fight. China is our fastest growing foodservice market and we hold a 40% share of the imported dairy foodservice business there.
“We are China’s leading dairy foodservice provider and have grown at 30% year-on-year. We have people located in 76 cities across China.”
In 2016 Fonterra rebranded its foodservice business Anchor Food Professionals.
It works in 50 countries with customers in bakeries, Italian kitchens, quick service restaurants, cafes and tea houses.
