"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.
The co-operative is partnering with leading dairy ingredient customers in the US, such as Premier Nutrition Company (PNC). Its largest brand is Premier Protein, the number one brand in the US readyto- drink category and convenient nutrition category.
In 2023, Premier Protein grew 25% in net sales and 32% in distribution points.
Fonterra’s Atlantic region president Richard Allen says the US has become a wonderful protein market for the co-operative. With consumer trends favouring protein, food manufacturers are following suit.
“Consumers across the US and even Europe are becoming savvy: they want to know what’s in their food and what’s the effect on their diet,” he told journalists in Auckland recently.
“It’s what I call the ‘proteinfication’ of everything. If you walk into any grocery store in the US, it’s a little bit different to NZ where you go to the protein aisle to find protein. In the US, you’ll find protein products right throughout the store.”
Some of top uses of dairy protein ingredients in the US include readyto- drink beverages, protein powders, and protein snacks. Fonterra provides ingredients into all three categories. The high protein snack bar category is growing significantly, reaching US$2.8 billion retail value last year.
Allen says the market for protein powder continues to present strong growth opportunities for Fonterra. The market value for protein powder in the US is expected to reach US$9.7 billion by 2032.
“Fonterra’s protein portfolio is well-positioned to meet key customer needs underlying these trends because of its ability to deliver high protein, functionality to meet manufacturing requirements and the right sensorial experience, and sustainability profile aligned with customer environmental goals.
“We are really leveraging the hard work that our farmers have put in, to position them as the most sustainable source of dairy globally.
“Market demand for value-added ingredients has held up well and we are seeing this play out through strong demand for our low-carbon dairy.”
He says Fonterra’s investment in research and development was paying off for the company.
“We’ve led the world in terms of some of the R&D and innovation over a number of years. And we’re the preferred supplier of many of these large global multinational food businesses.”
Allen believes the market for protein has evolved from being mostly for weightlifters and athletes to one where there is a demand for everyday applications of protein other than drinking a shake after working out.
One of most popular of these applications is healthy snacking.
“A decade ago, high protein snacks generally did not taste great, but the R&D work done around the products mean consumers no longer had to sacrifice an eating experience to get that nutrition,” he adds.
The indulgence category is another growing area, with high protein cookies and other confectionery becoming more popular.
“The wonderful thing with this trend is that in New Zealand we manufacture a significant amount of protein.
“The two main products we make are milk protein concentrate and a whey protein and they are usually in high concentrations of protein.
“Years of innovation into these products mean we can get that protein in without sacrificing the eating of the product and the flavour of the product. You no longer feel like you’re eating cardboard.”
Fonterra Atlantic
Fonterra's Atlantic region, formed in August 2022, includes the Americas – North, Central and South – and Europe. Allen, a former head of Farm Source, took up his role last year.
For Richard Allen, the US is a fantastic demonstration of Fonterra’s strategy in action – New Zealand milk, sustainability, and innovation.
“The US business has delivered a strong performance in recent years, and the US economy has been remarkably resilient. Market demand for value-added ingredients has held up well and we are seeing this play out through strong demand for our low-carbon dairy,” he notes.
