Solid third quarter result for Fonterra
Fonterra has announced an improved third quarter performance – with a profit after tax of $1.15 billion, up $119 million on the same period last year.
The co-op is supplying specialised ingredients, like bioative whey and its patented probiotic strains, to leading companies in key markets - China, US and South Korea.
The global health and wellness market is valued at US$66b, growing at 6.1% per year and medical nutrition is valued at US$50b globally and growing at 5% per year.
Fonterra's director active living, Komal Mistry-Mehta, says the way people manage their health and wellness is being revolutionised, the trend growing more prominently due to Covid-19.
She says consumers are rethinking what it means to age well, are being proactive with their health and taking a holistic perspective on their wellbeing.
This has given rise to a range of consumer solutions targeting specific health and wellness needs, which Fonterra is well placed to take advantage of, she adds.
Last year when the co-operative released its long-term strategy, it set an aspiration to grow operating profit by 40-50% from FY21 base by 2030. This will be done by focusing on our New Zealand milk, sustainability, nutrition and innovation credentials.
Mistry-Mehta says one of the ways Fonterra will create more value is to shift more of the Ingredients portfolio towards higher-value ingredients and solutions through its Active Living business.
She explains that this business addresses three dimensions of wellbeing (physical, mental, inner) and the health needs of a medical patient right through to those taking a proactive approach to their health and wellbeing.
"Fonterra is already well positioned to take a slice of these markets.
"We have expertise in protein to help people maintain muscle mass for better quality of life, dairy lipids that improve people's mood and probiotics to support immunity and digestion.
"To date, we're able to claim our products have health benefits relating to muscle health and sarcopenia (age related loss of muscle mass), mobility, malnutrition, and digestive health.
"In addition to this we're beginning to see benefits emerging in the areas or oncology care, perioperative care, mental wellbeing and beauty from within. We're also seeing complementary benefits of immunity, metabolic health, and weight management coming through."
The US remains a key market due to its interest in health and wellness and its wealth of innovative companies at the forefront of this trend.
The co-op is also focusing on Japan, China and South Korea with the team scoping Indonesia, Thailand and Vietnam for future potential.
"We already have a number of partnerships underway with customers who value our expertise," she says.
Four key partnerships are:
- An R&D partnership focusing on mental wellbeing with US based personalised nutrition company Sun Genomics.
- The fastest growing probiotic brand in China, Wonderlab, who is focused on providing nutrition solutions to younger generations.
- Korean brand Daesang a customer that values our specialist ingredients and our sustainability credentials. They've recently launched a new product using Fonterra's bioactive whey - which has lactoferin content 11 times higher than standard whey protein, to support immunity and provide protein benefits.
- Leading health solutions company, Life Extension, who offer a range of vitamins, nutritional supplement and blood-testing services. They launched a new probiotic supplement in the US market in 2021, using Fonterra BifidoB HN019 probiotic strain.
Mistry-Mehta says its Active Living business has grown steadily over the last few years.
"This growth has been driven by innovation, increase in market share and share of wallet, portfolio expansion and geographic expansion.
"Going forward we will continue to invest in R&D, customer experience and our service model, as well as look for opportunities to enhance our capability and strategy through partnerships."
