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

"Our" business?

OPINION: One particular bone the Hound has been gnawing on for years now is how the chattering classes want it both ways when it comes to the success of NZ's dairy industry.

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

Rural contractors call for overhaul of ag vehicle rules

Following a recent overweight incursion that saw a Mid-Canterbury contractor cop a $12,150 fine, the rural contracting industry is calling time on what they consider to be outdated and unworkable regulations regarding weight and dimensions that they say are impeding their businesses.

NZ seeks certainty on US tariff, says McClay

Trade Minister Todd McClay says his officials plan to meet their US counterparts every month from now on to better understand how the 15% tariff issue there will play out, and try and get some certainty there for our exporters about the future.

National

Machinery & Products

» Latest Print Issues Online

The Hound

A step too far

OPINION: For years, the ironically named Dr Mike Joy has used his position at Victoria University to wage an activist-style…

Save us from SAFE

OPINION: A mate of yours truly has had an absolute gutsful of the activist group SAFE.

» Connect with Rural News

» eNewsletter

Subscribe to our weekly newsletter