New Zealand commodity prices are likely to feel downward pressure over the year, says ASB senior rural economist Nathan Penny.
The co-op says rising incomes and a growing middle class in China are fuelling demand for items such as butter, cream and cheese.
To meet demand, Fonterra has boosted the availability of its Anchor Dairy Foods’ product range, increasing the number of stores it sells into from 1,400 to 1,700 in recent months and elevating the presence of its products on e-commerce platforms – a popular way of purchasing food items in China.
It also launched a mobile app campaign inviting users to share their favourite breakfast recipes using various dairy ingredients.
More than 8,000 recipes were shared during December and January by shoppers who bought Anchor products. Around 70 per cent of the recipes shared were Western-style dishes such as breakfast paninis and omelettes, while 30 per cent were Chinese-inspired dishes such as sweet potato cream soup, toast rolls with peanuts, and cheese and egg breakfast cups.
“Breakfast as we know it is changing in China,” said Chester Cao, Vice President of Brands for Greater China. “As incomes rise and the middle class grows, we are seeing greater demand for Western-style breakfast items such as butter, cheese and cream.
“Fonterra has supplied these products to the foodservice industry here for many years, but now we are focusing more closely on shoppers, encouraging them to see dairy products as a healthy, protein-packed start to their day.”
To promote dairy as essential, everyday breakfast food, Fonterra’s campaign also involved a number of chef demonstrations, including one by Michelin star holder Steven Liu who staged a cooking event in Shanghai in December.
The campaign also included digital advertising and activation with China-based food delivery app Eleme, which generated 89 million impressions among app users.
“It’s great to see a high level of engagement with our campaign and with our products,” said Christina Zhu, president for Fonterra Greater China. “It reaffirms that there is a growing appetite in China for more high quality dairy ingredients.”
Data from China Customs shows that imports for butter, cream and cheese all rose significantly in the first eleven months of 2016 compared with the year prior, with cream up 57%, cheese up 31% and butter up 21%.
“This increase in demand is significant,” says Zhu. “It’s driven by factors such as urbanisation, rising incomes and a greater desire for more premium items. We’re committed to meeting this demand with the right products in the right places.”