Innovation the key for growth in China
With the world’s second largest economy, and a population of 1.4 billion, it’s no surprise that China is an important market for the Co-op.
We’ve been providing nutritious and high-quality dairy products to customers and consumers for more than 50 years, and the opportunity for further growth in China is significant.
As China moves forward with its Healthy China 2030 initiative, a government-led programme to improve public health, there has been an increase in demand for health and wellness solutions, especially when it comes to nutrition.
Fonterra’s CEO for Greater China Teh-han Chow with some of our Application Centre chefs
For example, the recommended daily intake of dairy has increased from 300 to up to 500 grams per person per day. That’s potentially up to 700,000 tonnes of dairy, equivalent to more than 30,000 Fonterra tankers full of milk, consumed every day across the country.
Fonterra China reported an increased profit after tax in the FY24 interim results – up $94 million to $232 million, primarily due to strong performance in Foodservice, which is one of Fonterra China’s three businesses, alongside Ingredients and Consumer Brands.
Teh-han Chow, Fonterra’s CEO for Greater China (a region that includes the Chinese mainland, Taiwan, Hong Kong, and Macau) says he’s confident that Fonterra’s market share will continue to expand, helped in no small part by the five Fonterra Application Centres (FAC) in China.
Over the years, we’ve seen strong growth by partnering and collaborating with Chinese customers in nutrition and innovation. We’ll continue to focus here to make the most of the Chinese market potential, and to bring value back to Co-op farmers
“Our Application Centres are focused on developing new products tailored to Chinese preferences in taste, culture, and trends. In China's fiercely competitive food market, consumers are always on the lookout for the next big thing. We must adapt quickly to market trends and continuously innovate by creating unique products that are nutritious as well as meeting taste and quality needs,” Teh-han says.
One example of this is Fonterra’s work with Ningii, a leading Chinese lemon tea brand, to launch a new green tea with lemon cream topping to meet rising demand for new styles of tea among young Chinese.
Fonterra has also recently worked closely with Mengniu, a leading Chinese dairy manufacturer, to create six ready-to-drink beverages. The drinks make use of our milk protein concentrate, whey protein concentrate and calcium caseinate products to meet a growing market for nutritious ready-to-drink beverages in China.
The new green tea with lemon cream topping
“Over the years, we’ve seen strong growth by partnering and collaborating with Chinese customers in nutrition and innovation. We’ll continue to focus here to make the most of the Chinese market potential, and to bring value back to Co-op farmers.” Teh-han says.
“Recently we’ve seen the relationship with China strengthen even further. All dairy products imported to China from New Zealand became duty free on 1 January 2024, which is a big win for us and our Chinese customers.”