Fonterra looks to make the most of free trade with the UK
Last updated in May 2024.
New Zealand's UK Free Trade Agreement (FTA) went live last May and is widely seen as one of the country's most comprehensive Free Trade Agreements.
It enables high quality market access for the first time in over 50 years, when the UK was one of New Zealand's largest export markets.
Mike Bones, Fonterra’s Managing Director Europe, is leading the team that’s looking at maximising the opportunities for the Co-operative’s dairy ingredients. He says they’re focused on efficiency and simplicity, including choosing the right partners and sales channels.
Mike Bones, , Managing Director, Fonterra Europe
"The UK is the world's second largest dairy net importer, with both strong local demand as well as pull from customers that export," says Bones.
"So far, we've contracted 10,000 tonnes of product under the Free Trade Agreement, with most of this being cheddar from our Hautapu and Stirling sites. Butter, organic skim milk powder and proteins make up the remainder of the business and reflect the diverse opportunities available to Fonterra as a result of regaining access to the UK."
A number of wins at the recent International Cheese & Dairy Awards in Cheshire, England, are proof of how Fonterra’s quality and innovation are world leading and highly regarded by the local industry.
"Doors are opening for us in the UK thanks to Fonterra's world leading dairy sustainability credentials, enabling us to partner with customers who value the goodness of New Zealand dairy," says Bones.
The UK is a market that continues to surprise us with the breadth of opportunities, and we've done well to find two incredible partners to take our New Zealand dairy into the market.
Building strong partnerships
"The UK is a market that continues to surprise us with the breadth of opportunities, and we've done well to find two incredible partners to take our New Zealand dairy into the market,” adds Bones.
"So, phase two for us is about extending some of the fantastic global relationships that we have in the UK and building genuine and transparent partnerships that we know we will provide benefits to our customers and consumers in the UK while also returning value back to our farmer owners."
Leveraging sustainability credentials
Mike Bones says the work Fonterra farmers are doing in the sustainability space has a big impact on the Co-op’s sustainability credentials.
“Our farmers work hard to produce some of the world’s best and most sustainable milk. With New Zealand’s grass-fed farming model, our dairy is some of the lowest carbon dairy available,” says Bones.
He adds that shipping products to the UK does not have material impact on the Co-op’s overall emission.
“As a company that operates in a number of markets, we already include emissions from shipping in our overall calculations. Distribution makes up only one percent of our total emissions, so it does not have a material impact on our overall profile.”
“Despite this, we are committed to looking to make efficiencies across the supply chain where possible,” says Bones.
Fonterra in Europe
The Co-op's European business is a true regional hub. It provides sales and customer support to some of the world's largest dairy, nutrition and food companies, including Fonterra’s global strategic customer, Nestlé. It also exports products to and from New Zealand, and around the world.
Europe is currently the largest market for functional Whey Protein Concentrate sales, with the high value ingredient used in cultured foods applications, such as high protein yoghurts and meal replacement beverages. Whey Protein Concentrate is sourced from New Zealand, and also the Co-op's Heerenveen factory in the Netherlands, 90 minutes' drive north of Amsterdam.
Europe is a large market for Whey Protein Concentrate sales