What Would Synlait Be Worth to Fonterra or a2 Milk?
Speculation of a possible joint move by Fonterra and a2 Milk to buy Synlait raises a much bigger strategic question, says agribusiness expert Dr Nic Lees.
Chows says we are reaching a period where product research and development will start shaping the diets of future generations.
“It’s an exciting time for Fonterra as we look to play a leading role in how the world sources dairy nutrition,” says Chow.
“Sales trends show consumers around the world are demanding a more protein rich diet, and with tastes varying from region to region we’re working closely with our customers to make sure we deliver the products to match.”
Fonterra is becoming increasingly focused on diversifying and specialising its products to meet customer demand.
While most established dairy markets have an already well-defined product mix, consumer preference is quickly moving in new directions off-shore as markets across wider Asia and the Middle East begin to define the way they consume dairy.
Products like cheese are only now beginning to feature prominently in some of the world’s dairy growth markets, says Chow, and a lot of product innovation is going on behind the scenes to make sure these products hit the mark.
“Our customers in Korea, for example, are very conscious of the amount of salt in their diets, and many see dairy as a nutritious, low salt protein option. To cater to this specific demand, we have formulated a low salt cheese down at our Stirling site in the South Island that has become extremely popular with young children as an introduction to dairy.”
In Hong Kong, Fonterra’s customers wanted to see healthier snack options in supermarkets for their children. Because of this demand, Fonterra launched ‘Anchor Candy Cheese’.
The bite-sized cheese cubes were created following parents demanding more nutritional options for lunchboxes, while also keeping their children interested in what they are eating. Anchor Candy Cheese contains twice the nutritional content of regular cheddar and less sugar, making it the perfect combination.
Fonterra is also innovating its approach in powdered products, and not just for nutritional consumption.
“At our Kapuni site in South Taranaki, we have created a specialised pharmaceutical lactose called Wyndale, tailored specifically for the Indian market. The product is used as an excipient in medicines, helping take the active ingredient to a targeted location in the body. Kapuni’s primary customer, DFE Pharma, has a 25% share in this market, with ambitions of growing further.
“By working directly with Kapuni, Wyndale went from concept to commercially produced in just five weeks. Since its launch, demand for this product has increased by 75%, filling a gap in the market,” says Chow.
These products will help Fonterra’s primary focus, delivering more cash into farmer’s pockets through increased value-add production.
“At the end of the day, it comes back to our farmers and what we can do to ensure we are making the most out of every drop of milk. By creating products that add value, we are maximising returns while helping shape the future of dairy in strategically important markets.”
