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 collaboration announced last week with VitaKey Inc and its co-founder Dr Robert Langer will add more value to New Zealand milk, says Judith Swales, chief executive for Fonterra's Asia Pacific region.
Swales says Fonterra doesn't expect milk volumes to grow in the coming years therefore it's important to "maximise value from every drop of milk".
The collaboration is part of Fonterra's long-term strategy and ambition to be a leader in dairy innovation and nutrition science. Fonterra expects the first products in the market within five years.
Swales says Fonterra has a long and proud heritage of dairy innovation, pioneering many world firsts and, increasingly, new solutions which aim to help people live healthier and longer lives.
The co-op's Research and Development Centre is home to one of the largest dairy culture libraries in the world, containing more than 40,000 strains.
Two of these strains, LactoB 001 and BifidoB 019, address key health concerns such as digestive issues and immunity and are recognised as being in the top five global probiotics.
Swales says by partnering with VitaKey, they aim to "make nature better" by combining the goodness of New Zealand with VitaKey's technology.
"In this way, we can really drive out Active Living business by appealing to the growing health and wellness consumer segment that desire the maximum functional benefits from food and are motivated by scientific credibility.
"Because the nutrients are encapsulated and highly targeted, it also means we can use less milk in our production, making our milk go further while reducing food waste," says Swales.
VitaKey specialises in precision delivery of nutrition - an emerging area of research that seeks to deliver the right nutrients, in the right amount, to the right part of the body at the right time.
Co-founded by Langer, the VitaKey delivery technology platform for nutrients is based on technology licensed from the Massachusetts Institute of Technology and developed at the Langer Lab, the largest academic biomedical engineering lab in the world.
Utilising VitaKey's proprietary technology and customised solutions, Fonterra is looking to design dairy products that incorporate targeted and time-controlled release of specific dairy products that incorporate targeted and time-controlled release of specific dairy nutrients, starting with probiotics, in a way that locks in the freshness for longer and allows the nutrients to be more active and beneficial in the body.
Langer's vision for Fonterra and VitaKey working together is "to do something that really can change the world, rather than something incremental."
He is excited to collaborate with Fonterra to help further unlock dairy's nutrition.
"The Covid pandemic has underscored the need for solutions to enhance health and wellness and boost the immunity of men, women and children at every stage of life. We believe that good nutritious food can help people of all ages lead healthier lives," says Langer.
