For four consecutive years, Fonterra, a dairy giant, continued to make intensive moves.
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Zhou Dehan, CEO of Fonterra Greater China

For four consecutive years, Fonterra, a dairy giant, continued to make intensive moves. Xiaoshidai learned at the scene that Fonterra not only released ten new products such as Anja imported fresh milk imported from Asia for the first time and Kapiti cabetti special cheese made its debut in the Chinese market, but also signed letters of intent for cooperation with many enterprises such as HEMA fresh, China Southern Airlines, JD, Qiaochu, bean and fruit food, miaokolando, overseas Chinese, Gu Ming and so on. Under the “double carbon” goal, Fonterra also showed a variety of fancy ways of sustainable development, including introducing new Zealand’s “net zero carbon” organic butter raw materials, cooperating with China Environmental Protection Foundation to advocate the combination of low-carbon environmental protection actions and the use of low-carbon ingredients.

Zhou Dehan, CEO of Fonterra Greater China

Taking this opportunity, the snack agent communicated with Zhou Dehan, CEO of Fonterra Greater China, and the heads of catering services and consumer brands. Let’s take a look at how this large dairy enterprise promotes growth under the new situation of repeated epidemic.

Digital business opportunities

At present, Fonterra Greater China has four business units, including raw materials department, catering service department, consumer brand department and strategic customer department. In fy2021, the above business units maintained a good growth trend, and the catering service department contributed the most to the profits. So, does the recent epidemic impact on catering affect Fonterra? In this regard, Zhou Dehan told the snack generation that it does not seem to have a great impact on the business at present.

 in fact, behind this resilience is the company’s successful grasp of new business opportunities in the post epidemic era. Dai Junqi, vice president of Fonterra’s catering service department in Greater China, told the snack generation that in order to promote business growth under the epidemic situation, the Department made new efforts around the changes of dining scenes. “The shift from hall food to online order and pick-up means that the consumption scene, the best eating time and temperature of the product have changed. We will also take special consideration in product innovation and application development to launch some products that are more suitable for quick delivery and pick-up or take out consumption”. As for the accelerated rise of new retail formats integrating online and offline, Fonterra also quickly paid attention to this hot spot. “We are cooperating with OEM manufacturers and retailers to promote our low-temperature and short-term baking products and drinks to a new retail channel, which is developing very fast,” Dai Junqi said.

Another example of  is tapping digital opportunities. Dai Junqi said that Fonterra is increasingly using live broadcast and other online methods to provide service support for customers. In addition, the company also hopes to reach a large number of long tail and small customers who cannot be contacted directly through digital means, such as private bakeries or beverage stores. “We hope to provide customers with a more efficient and competitive product supply through information support, technical support and e-commerce transactions, which is also a new expansion we are doing through digitization,” he told snack generation.

Overweight and high-end

Let’s take a look at Fonterra’s consumer brands in Greater China. Eight years after entering the Chinese market, this business intends to focus more on high-end products. Snack generation noticed at the scene that a new product promoted by Fonterra during this Expo is high-end Anja imported fresh milk, focusing on “grass fed grazing cows from New Zealand”, “72 degree pasteurization process to retain immunoglobulin and other active nutrients”, and launched 60 HEMA fresh stores in Shanghai and Hangzhou.

Bo Shuangyu, vice president of Greater China of  Fonterra, said in the exchange that the new launch is to meet the demand for consumption upgrading in the Chinese market. Next, the company’s fresh milk strategy is still “two-step”, that is, continue to cooperate with HEMA and other platforms to layout local fresh milk, and make efforts to develop new Zealand’s own fresh milk. At present, Fonterra’s consumer goods business has nearly 50 product portfolios including normal temperature milk, fresh milk, catering dairy products, adult milk powder and other categories, covering nearly 300 prefecture level cities and more than 10000 stores. Turning to the focus of the category, Bo Shuangyu, vice president of Fonterra Greater China, told the snack generation today that the company will pay attention to catering dairy products (Note: including butter, light cream, cheese slices, etc.), high-end normal temperature liquid milk and milk powder in the short term.

 she further pointed out that in terms of dietary dairy products, the per capita intake in the Chinese market is far lower than that in the mature markets in Europe and America, and has maintained a high growth trend in recent years. For example, online sales of Anja cream have nearly tripled this year. “Anja cream has great advantages in terms of technology, pastry and durability. We are also doing cost calculation to see how we can achieve the best balance between cost and scale and bring more affordable choices to Chinese consumers.” Bo Shuangyu said, “we have also made some price adjustments.” the snack generation also learned that in order to speed up the layout of high value-added dairy products, Fonterra Greater China completed strategic upgrading in fy2021 to further optimize its product portfolio. One example is to extend the popular models originally only for catering customers to consumers. “In the first half of the year, we launched a mozzarella cheese, which was originally only in the catering channel and did not give C-end products. However, as more and more Chinese consumers like to make pizza at home, we also designed a small package of 208 grams to push it to consumers, basically one package at a time, and now it has been sold out of stock,” Bo Shuangyu said.

Challenge and optimism go hand in hand

However, Fonterra, which has successfully adapted to the “epidemic” like world with the help of rapid adjustment strategy in the Chinese market, is still a little cautious about the outlook for fiscal year 2022. “There will be challenges and optimism in fiscal year 2022,” Zhou Dehan told xiaoshidai. On the one hand, the challenges come from the uncertainty of the epidemic situation. “If an epidemic occurs in some cities, it will certainly have some impact on business, so it depends on how serious the outbreak is. In addition, the market has some concerns about cold chain products.”.

 he said that Fonterra has taken many measures to ensure product safety. For example, New Zealand factories will carry out stricter risk control on export products. Another challenge is rising raw material prices. “We think that consumers in the Chinese market have more and more purchasing power and are willing to spend more and more money, but we will also make a question mark. If prices (continue) rise, how many consumers are acceptable and how many consumers are unacceptable,” Zhou Dehan said. As for whether Fonterra will ease the pressure by raising prices, he responded that the industry will basically price according to the global dairy trade index, which has shown an upward trend recently. “The price will always follow the market, and we will respond according to the market conditions.”.

While facing the challenges, Fonterra is vigorously exploring new opportunities. Taking the accelerated growth of cheese as an example, Zhou Dehan said that compared with ordinary milk, cheese belongs to more concentrated dairy products and is also a major choice for many Chinese consumers to eat more dairy nutrition. Therefore, he is very optimistic about this track. Following Anja children’s cheese stick, the company has formulated the “cheese stick 2.0” scheme, and the specific time of listing depends on the wishes of customers. Euromonitor consulting data show that the market scale of China’s cheese industry will reach 8.843 billion yuan in 2020, with an annual compound growth rate of more than 20% from 2006 to 2020. According to the report released by inminster in December last year, although the base of cheese market is small, it will continue its growth trajectory and become the fastest-growing dairy category. Considering the differences in cheese consumption demand at home and abroad, Fonterra is also actively exploring localized products and innovative models. The snack generation introduced that Fonterra has been listed in China. The children’s cheese stick without white granulated sugar is made in China with raw materials imported from New Zealand.

During the exchange, Zhou Dehan revealed that in order to quickly implement innovation, this product was developed by Fonterra team, and then processed in a third-party factory that passed the examination. At the same time, the company sent someone to supervise the production. “This is a new trend in the Chinese market, and many brands are also making use of third-party capabilities.”. He said that innovation is the core of Fonterra. The company will gather the resources of New Zealand’s global R & D center, Fonterra meiankang Shanghai innovation center and multiple application centers to create more products suitable for Chinese consumers.

It’s been over a year since the COVID-19 pandemic caused milk prices to plummet…

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