Claire Phoenix met with Theo Spierings, chief executive of Fonterra at the World Dairy Summit in Yokohama last year. He talks here about some of the fastest growing dairy categories on a global basis.
Fonterra is known worldwide for its dairy products, ingredients and foodservice solutions. The company’s best known brands are Anchor and Anlene.
As Fonterra’s flagship brand, Anchor provides the goodness of dairy straight from the farm to families around the globe. It offers a range of powdered milks, ready-to-drink milks, yogurts, cheeses and butter in countries across Australia, New Zealand, Asia, Africa and the Middle East. Anchor stands for proven nutrition and the Anchor Institute funds nutritional research by established scientific and medical experts.
The Anchor brand was created in 1886 when entrepreneurial Cornish farmer, Henry Reynolds established a tiny factory in New Zealand with the goal of making quality butter. From these small beginnings, Anchor has grown to become one of the top global brands with a wide range of dairy products sold in 70 countries.
Theo Spierings: The global dairy industry today is in a very strong position and I see healthy growth opportunities as global trade and demand continues to increase year-on-year. Demand is being driven by growing economic strength and urbanisation of emerging markets such as Asia and South America. As incomes rise in these emerging markets, consumers are looking for nutrition that supports the health of their families and dairy has an important role to play.
This growing demand for dairy is not only across young families, but with an ageing population in China and OCED, countries there is greater nutritional demand from older consumers looking to stay fit and active.
Rising incomes alongside busy lifestyles are also driving demand for out-of-home convenience food, such as pizza and hamburgers sold by fast-food restaurants, which contribute to global dairy demand.
Theo Spierings: As the world’s largest dairy exporter we are well placed to help meet this growing demand. Fonterra already has well established market leading consumer brands and ingredients businesses in emerging markets such as Asia and South America.
We are currently growing our milk production both in New Zealand and overseas. Today milk supply in New Zealand is forecast to grow by 2-3% a year but global demand is increasing much faster than that and if we want to meet this growth, we need to be able to increase our milk supply – at home and overseas. Our global sourcing complements our New Zealand milk supply and provides fresh milk closer to markets in which we operate.
The countries from which we’re currently sourcing milk include China, Australia, Sri Lanka, and Latin America, and our strategy is to continue to grow these in market milk pools.
Theo Spierings: With increased access to information, consumers are becoming more conscious about what they eat and the nutritional value food delivers. They are demanding nutritional products that support the health and well-being of their family and our strategy is focused on targeting the three following segments. Firstly, paediatric nutrition is the fastest-growing dairy category in the world, with parents increasingly demanding dairy to support growth and development of children and babies.
While we have a substantial business manufacturing high standard ingredients for multinational infant nutrition companies, we also have our Anmum brand which already provides healthy nutrition for pregnant women and breastfeeding mothers. There are opportunities to continue to extend our Anmum brand further as trusted nutrition for mothers and babies – with China and ASEAN the priority. We have already done this successfully in Malaysia and Indonesia.
With an ageing population particularly in China and across Asia, another focus is on developing dairy products that support nutrition for the old. These products are designed not only to provide a nutritional diet but also to help increase their mobility. Our Anlene bone health brand is a genuine success story in this category – and it plays a role in the prevention of osteoporosis. It also supports joint flexibility and muscle health, so ageing people can stay mobile and active. It is the leading high-calcium brand in Asia, with a significant share of the market.
The third area of our focus is on consumers who are eating meals out-of-home. Our Foodservice business operates in around 50 countries with a portfolio of cheese, cream, butter, yogurt, pastries and beverages, designed to meet the needs of chefs and commercial kitchens. It is an area of the business where we see continued growth and our innovation teams will play a big role in supporting these growth plans – particularly as the world demands better-for-you convenience foods.
Theo Spierings: Fonterra’s Research and Development Centre has developed a world-leading patented technology that enables us to make frozen natural shredded mozzarella straight from milk in one day, rather than the two months taken by conventional mozzarella processes.
When thawed, the mozzarella has a superior functionality and composition structure which allows for a richer flavour, with unique stretch and melt properties.
This technology is helping Fonterra to meet growing international demand, primarily in global fast-food restaurant chains, supported by growth in regional fast food and fine dining restaurants.
Theo Spierings: This technology was created out of a pilot project in 2005 and has been expanded in stages since that time. The most recent expansion is a $72 million plant enhancement that will be completed mid 2014. The Mozzarella product is already available in-market.
Theo Spierings: For Fonterra, the World Dairy Summit is about connecting with the industry and developing a united approach to science and food safety standards across the globe. Today’s consumers increasingly want to know more about their food and where it comes from, and we as an industry need to ensure that the science we use provides them with the confidence that their dairy products are safe and of high quality.
Theo Spierings: It’s exciting to think where the dairy industry will be in the next 10 years. We have a rapidly growing population that is set to double by 2050 and demand in 10 years time will be as strong as ever with dairy becoming a vital part of consumers everyday nutrition. Growing greater supply across the world and product innovation will play crucial roles in meeting this demand, as well as giving consumers greater confidence in dairy products. However, our absolute focus must remain in making it affordable and accessible to everyone, everyday.
Theo Spierings: Anlene has a 20-year track record as the leading bone health product in Asia. The brand’s mission is to raise awareness of osteoporosis so people can take steps to prevent it through better nutrition and exercise.
In the past 12 months alone, Anlene has conducted more than five million free bone scans across Asia and the Middle East, and partnered with local osteoporosis societies around the world to help raise awareness of maintaining bone health.
To date, Fonterra has spent more than US$50 million on bone health research and US$15 million directly on the development of Anlene, increasing of understanding of osteoporosis and the role of dairy in its prevention. The experts behind Anlene have funded, and been involved with 18 clinical trials relating to bone health.
Fonterra has worked with the International Osteoporosis Foundation IOF since 2007 and became IOF’s Regional Nutrition Partner Asia-Pacific in 2010. The partnership is based on a shared vision to increase bone health awareness and education in the Asia Pacific and Middle East regions. Some of the activities Fonterra has supported include the Asia and Middle East/Africa Regional Audits and World Osteoporosis Day activities in various countries across the region.
Research The Anmum Knowledge Centre is a network of world-leading scientific research institutes, paediatricians and child-development experts. In 2007, Fonterra set up the Anmum Advisory Board consisting of key opinion leaders in the field of child health and development from the US, Australia and New Zealand, to guide clinical research and maternal-child health education programmes conducted by Anmum. The Board also assists local doctors and nurses across Asia to keep up with the latest scientific discoveries in the area of child development.
The Anmum nutritional system includes specially formulated milks for women planning to start a family, during pregnancy and while breastfeeding, as well as products for infants and young children.
Backed by US$50 million of research into nutrition, maternal and infant health, and child development, Anmum products are formulated with key nutrients such as Folate, Gangliosides (GA), Sialic Acid (SA), Docosahexaenoic Acid (DHA), Essential Fatty Acids (EFA) and iron. These nutrients have been scientifically proven to play a role in the brain development of infants and young children.
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