The daughter of a milkman, Swales grew up around dairy farms although she admits not having to wake up every morning to milk cows. Today, she lives on a dairy farm near Melbourne and as Fonterra Australia managing director she heads a business that collects nearly 1.6 billion litres of milk from 1300 farmers, runs 11 processing plants and supplies leading dairy products to Australians.
The principle of delivering a quality dairy product on time is an enduring memory from Swales’ childhood, but running a consumer business in the highly competitive Australian market has a lot more challenges. Swales was appointed in June 2013 to turn around the co-op’s Australian business, reeling from the effects of heightened competition for lower milk volumes and continuing margin squeeze on consumer brands.
Nine months into the role Swales is confident the reshaped Australian operation is making progress. It’s no secret Australia is a tough market and there are challenges but we are focussed on turning the business around, she told Dairy News.
“We are making good progress. It’s a journey and I think we’ve got the right team on board.
“We have a billion dollars tied up in working capital and like any other business we need to make sure we give our shareholders the return on the capital invested. That’s where we are focussed at the moment – making sure we are an integral part of a winning supply chain where farmers and customers are profitable and growing.”
As part of the business reshape, Fonterra is putting the lion’s share of its Australian advertising spend into five master brands: Western Star butter, Perfect Italiano cheese, Mainland cheese, Bega cheese and Ski yoghurt.
The focus is on making the brands bigger and better, Swales says. “Part of this is transitioning sub brands underneath these master brands to add reach and scale.”
In the yoghurt and dairy desserts market Fonterra is trying hard to regain the market leader status it recently lost to Yoplait. Swales says the yoghurt category is much changed: small gourmet yoghurt brands have eroded the market share of bigger international brands like Ski and Yoplait.
It’s early days but Fonterra hopes its recent purchase of Tamar Valley Dairy, which has pouch and single serve facilities, will help it regain the number one spot.
In the cheese category, Fonterra remains the top cheese with 24% market share. Its Perfect Italiano cheeses are a big success.
With consumers now watching food shows like Master Chef and My Kitchen Rules, everybody wants to be culinary hero, Swales says.
“What we are doing with Perfect Italiano is helping them cook like a master chef but making sure they have the right cheese for the right occasion. So, if you’re making a pizza, putting shredded cheddar on it will not give you the right outcome; making sure you have the right mozarrella will absolutely give you the right outcome.
“So, we’re tying in with big cooking shows and making sure our Perfect Italiano and Western Star brands are supporting that kind of changing consumer trend.”
Fonterra’s Western Star butter has 18% market share and the co-op leads the spreads market with 26% share. It sells one tub of Western Star butter every second.
Fonterra also supplies the food service industry – about 7500 restaurants, pubs and clubs – and is alongside chefs nationwide.
The main thing is not the number of brands but the right brands for each category, Swales says.
“We are starting to be clear about the role brands play in each category: growing the category and our brand in the process. It’s a journey and we are making good progress.”
