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.
NZMP’s New Zealand origins, trusted name and reputation for first-class quality are paying dividends as US consumers increasingly turn to brands that offer high-quality, safe and nutritious food from trusted sources.
Fonterra USA key account manager Rachel Marshall says ‘grass-fed’, pasture-raised, free-range dairy is experiencing a surge in popularity as people become more health conscious and informed on what they put in their bodies.
“People are looking for natural flavour and goodness, higher nutrient levels and positive effects on the environment, including feeding animals as they were designed to be fed – roaming on pasture. As a result, more and more people prefer a ‘grass-fed’ option, such as those offered by NZMP ingredients, Fonterra’s dairy ingredients business, and are prepared to pay more for them.”
Marshall says that more than 90% of NZMP products are created from New Zealand dairy and our country’s pasture-based farming system offers NZMP a strong commercial advantage in the US.
“The NZMP brand evokes images of lush pastures, cows grazing naturally outdoors and milk bursting with nutritious goodness – images that reach to the heart of people’s growing desire for less industrialised, more natural food.
“By buying NZMP New Zealand dairy ingredients, customers may be able to portray NZMP’s sought-after attributes in their own brands - dairy from grass-fed cows, which is free from animal growth hormone (rBST), and the strong NZMP name.”
She said these attributes may help with customer differentiation on shelf, increased market share, higher margins and enhanced brand loyalty.
One US nutritional company, a long-standing purchaser of NZMP organic milk protein concentrate, promotes New Zealand-linked benefits, such as “100% New Zealand Source”, “hormone free” and “grass fed”, on some of its protein products. The company founder says that sourcing organic protein from NZMP helps their products to be a cut above the rest.
NZMP products are also recognised for their top product quality and performance. Batory Foods, a large US protein distributor reports that their contract manufacturers prefer Fonterra’s milk protein concentrate, citing its quality and ease of manufacture.
Batory Foods Senior Product Manager Vanessa Hodges says, “Manufacturers, who make beverages from milk protein concentrates, say competitors’ products can be more watery and often need the base formula to be modified. As a result, the company selling the end product truly appreciates the NZMP ingredients, as they see them as offering them value over similar competitor products.”
Marshall says that the strength of the NZMP brand reflects its reputation for product quality, genuine ingredients, dairy expertise and safety and integrity of its supply chain, combined with the New Zealand advantage - a formidable mix in any market.
