Why Fonterra accepted defeat in the dairy aisle
OPINION: Fonterra's sale of its consumer dairy business to Lactalis is a clear sign of the co-operative’s failure to compete in the branded consumer market.
The brand Dreamery has had a “fantastic reception”, says Judith Swales, chief operating officer, global consumer and foodservice.
Fonterra is working with joint venture partner Future Group which is present in 26 of 31 Indian states with over 2000 modern trade outlets and 5000 public distribution outlets.
“Dreamery was unveiled in Mumbai in June this year, with the goal of delivering a new generation of innovative and nutritious dairy products to excite the new Indian consumer -- something we’re calling Dairy 2.0,” Swales told the India New Zealand Business Summit in Auckland this month.
“We’re creating these products from locally sourced milk. The milk will be collected from Indian farmers, helping to uplift India’s dairy industry while also enhancing food safety and quality across the supply chain by implementing Fonterra’s stringent global standards.
“At the same time, we’re also enhancing the safety and quality standards and dairy processing infrastructure of the third party manufacturers who process these products in India.”
Having access to this locally sourced milk means Fonterra can create consumer products that offer enhanced nutrition, taste and texture to Indian consumers.
They increase demand for high-quality, value-added dairy.
“To date, we have launched four products tailored to the needs of the New Indian consumer: Dahi, UHT Toned Milk, Chocolate and Strawberry Milkshakes, with more planned for the coming months.
“Today we have products in 1100 Future Group Modern Trade stores all across India.
“And we’re present in 500 general trade stores in key cities including Mumbai, Pune, Bangalore, Ahmedabad and Hyderabad.”
Since the launch they have had a fantastic response, says Swales.
“Dreamery’s Milk Shakes and UHT Toned Milk have already achieved more than 10% of sales in their respective category in Future Retail Stores. As we establish the brand, we’re focused on building a strong consumer base with strategic expansion throughout India.”
9% annual growth
Fonterra sees huge potential in India for its foodservice business Anchor Food Professionals, says Swales.
The Indian food service industry is set to grow at 9% each year until 2023, when it is predicted to reach a total value of over $130 billion.
“The new Indian consumer eats out of home on average twice a week and when they do they’re demanding high quality and better tasting food,” said Swales.
“When you consider that dairy is used in over 10% of food served in restaurants, you get an idea about how important it is.”
With Anchor Food Professionals, Fonterra will enable chefs in the Indian foodservice sector to create food that not only tastes and looks better, but helps them to run a more efficient kitchen with better yield and less wastage.
