Wednesday, 20 June 2018 14:55

Chinese eggs not all in one basket – Fonterra

Written by  Sudesh Kissun
Lukas Paravacini. Lukas Paravacini.

China's digital world is second to none, but Fonterra isn’t putting all its eggs in one basket in selling fresh and packaged food.

Fonterra chief operating officer global consumer and foodservice Lukas Paravacini says the co-op is embracing e-commerce and traditional brick-and-mortar as its sales strategy.

Speaking at a recent New Zealand China Business Council conference in Auckland, Paravacini outlined lessons Fonterra has learned over the last five years while building a $3.4 billion business in China.

“We have a strategy for our consumer business in China that gives us opportunities online and offline,” he says.

About 55% of the co-op’s consumer business in China is online; Fonterra has arrangements with two big digital players, Alibaba and Tencent.

Fonterra’s Anchor UHT milk is also available in 13,500 stores throughout China.

“Our strategy is online and offline; we don’t have our eggs all in one basket -- and it is working,” says Paravacini.

Anchor milk is the top imported UHT brand offline and online. 

Paravacini says it’s “an incredible success story: we are in the top five beverage of Alibaba’s Tmall flagship store,” he says.

“This is putting Anchor among the top consumer brands in China next to the big players who have been operating in China for years.”

Internet use in China is booming: 770 million Chinese use the internet and last year 300 million people ordered meal deliveries online worth US$32b.

Interestingly, only 2% of total fresh food, by value, is sold online and 4% is packaged food. 

Fonterra’s dairy products fall in these two categories. 

Paravacini says food safety is very important to Chinese consumers. “They still want to touch and feel their food before they buy it.”

Fresh food sales in China topped $25b and remain a fast-growing category; large digital players are seeking growth opportunities.

Paravacini says e-commerce is driving the co-op’s growth in China and is an opportunity all NZ businesses must seize.

He says the co-op is using digital technology sales, branding and direct consumer engagement. But digital is more than just sales; Fonterra uses online consumer data to drive sales and digitalise its business. 

Paravacini says Chinese consumers love NZ products and will pay a premium for products they can trust.

More like this

Cracked China

OPINION: Your old mate reckons Fonterra and its dairy farmer shareholders may well be all cock-a-hoop about the prospects of a near $8 payout this year and one north of $8 next year.

An eye on the future

Fonterra recently announced a forecast milk price range for the coming season of $7.25 to $8.75 per kgMS, with a midpoint of $8.00 per kgMS.

Organic milk price dropped

Fonterra's small group of organic farmers are facing a drop in milk price after a record $10.26/kgMS payout last year.

National

Health Hub returns

The Health and Wellbeing Hub is back at Fieldays this year, focusing on the importance of rural health and providing…

Machinery & Products

Lady muck really does suck

As anyone will attest to – if they’re married to someone with horses, have kids with ponies or are foolish…

The perfect workhorse

Hastings-based Kleer Contractors provides 24-hour machine work and labour for a local food processing plant.

All-new Claas Disco arrives

The Claas Harvest Centre display at Mystery Creek will include the public debut of the all-new CLAAS Disco 10 series…

» The RNG Weather Report

» Latest Print Issues Online

The Hound

Cracked China

OPINION: Your old mate reckons Fonterra and its dairy farmer shareholders may well be all cock-a-hoop about the prospects of…

Seriously?

OPINION: The Hound hears that government department MBIE is apparently working on a 'NZ Battery Project' to try and find…

» Connect with Rural News

» eNewsletter

Subscribe to our weekly newsletter