Tuesday, 02 July 2019 11:55

Fonterra back in India

Written by  Sudesh Kissun
From Left to right: Fonterra Future chief executive Ishmeet Singh, Fonterra India and Sri Lanka managing director Sunil Sethi, Future Group chief executive Kishore Biyani and Fonterra strategic portfolio management director Chris Gree. From Left to right: Fonterra Future chief executive Ishmeet Singh, Fonterra India and Sri Lanka managing director Sunil Sethi, Future Group chief executive Kishore Biyani and Fonterra strategic portfolio management director Chris Gree.

Fonterra's re-entry into the lucrative Indian market comes after years of homework, claims Fonterra India/Sri Lanka managing director Sunil Sethi.

He says India’s dairy market has evolved over the last 12 years and the co-op is well placed to use its dairy expertise to meet the needs of Indian consumers.

Last week Fonterra launched its Dreamery brand of dahi (curd), UHT toned milk and chocolate and strawberry milkshakes in Mumbai.

This is the co-op’s second foray into India since its inception. In 2001, Fonterra formed a joint venture with Bangalore-based Britannia Industries, but pulled out in 2009, saying at the time that it no longer fitted its strategic priorities.

Sethi says India now has a very different dairy industry. Consumer tastes have changed and they are now open to innovation. Logistics and cold chain systems there have vastly improved.

Fonterra hopes to have a full range of Dreamery dairy products on sale there within two years, using milk sourced in India. And Sethi says Fonterra will also tap into India’s growing food service business by supplying products made in New Zealand.

Consumer demand for dairy in India over the next seven years is expected to increase by 82 billion litres -- seven times the growth forecast for China.

“India consumes 170 billion litres of milk every year... the opportunity is huge,” Sethi told Rural News.

The joint venture partner, Future Group, is present in 26 of 31 Indian states with at least 2000 modern trade outlets and 5000 public distribution outlets and a nationwide cold chain and ambient distribution network.

Sethi will chair the joint venture board with three representatives each from Fonterra and Future Group.

Chairman John Monaghan and chief executive Miles Hurrell visited India a month ago for an update on the joint venture. 

A good time

Former Fonterra director Earl Rattray believes the timing is right for the co-op to re-enter India.

Rattray, who has dairy farming interests in India, says the country is going through a massive transition.

“This is visible in rising consumer aspirations and expectations around what they buy and where they buy it,” he told Rural News.

Rattray is impressed with Fonterra’s tie-up with the Future Group.

“They are one of these ‘new age’ companies which will transform India, quite a positive disrupter in the market, and run more like what we are used to in terms of corporate governance. It’s a bit like a Walmart of India, except they are Indian, and you need to be to understand the Indian consumer.”

Rattray says the Indian market has come a long way since Fonterra’s first foray with Britannia.

“The focus of that joint venture was initially on fresh white milk across the country, almost the only category at that time. It was competing with established companies which do things differently from what we are used to, and it was competing with the massive informal trade.”

More like this

Cynical politics

OPINION: There is zero chance that someone who joined Fonterra as a lobbyist, then served as a general manager of Fonterra's nutrient management programme, and sat on the board of Export NZ, a division of lobbyist group Business New Zealand, doesn't understand that local butter (and milk and cheese) prices are set by the international commodity price.

Why is butter so expensive in New Zealand? Fonterra explains

Kiwis love their butter, and that's great because New Zealand produces some of the best butter in the world. But when the price of butter goes up, it's tough for some, particularly when many other grocery staples have also gone up and the heat goes on co-operative Fonterra, the country's main butter maker. Here the co-op explains why butter prices are so high right now.

Featured

Rural backlash over plan to cut police staffing

Federated Farmers North Canterbury president Bex Green says two public meetings held this week should have made it loud and clear that rural families and businesses are concerned about proposed staffing changes at NZ Police.

DairyNZ thanks farm staff

August 6 marks Farm Worker Appreciation Day, a moment to recognise the dedication and hard mahi of dairy farm workers across Aotearoa - and DairyNZ is taking the opportunity to celebrate the skilled teams working on its two research farms.

Editorial: Getting RMA settings right

OPINION: The Government has been seeking industry feedback on its proposed amendments to a range of Resource Management Act (RMA) national direction instruments.

National

Machinery & Products

» Latest Print Issues Online

The Hound

Trop de Paris!

OPINION: Your old mate's ear has been chewed off recently by farmers voicing their displeasure with the National Party, particularly…

NZ vs Aussie beef

OPINION: Your old mate hears that at a recent China Business Summit, PM Christopher Luxon delivered a none-too-subtle "could try…

» Connect with Rural News

» eNewsletter

Subscribe to our weekly newsletter