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.
That criticism is misguided: the co-op should be congratulated for being proactive.
Fact is that no other company or industry in NZ has faced such a widespread, negative, biased bashing from mainstream media, lobby groups, self-important commentators and political opportunists. This has led to an extremely jaundiced, unfair and ill-informed public view of the company and dairy sector in general: to see this one need only look at the online comments on any media story mentioning dairy.
If Fonterra deserves any criticism it would be for its delay in responding to this growing problem. NBR reports that last year when Fonterra researched the public's perception of it, the damning results showed that only 10% of New Zealanders thought they knew the global company well and only 60% knew it was farmer-owned.
So Fonterra last May went on television and online with its 4.31am 'story' ads fronted by All Black captain Ritchie McCaw. The campaign has some of the giant co-op’s 10,500 farmer suppliers talking about what they do onfarm and their milk's journey from farmgate to consumer.
Further ads this year have promoted the pureness of dairy, the smartest farmers and the global reach of Fonterra’s brands and products; more are planned.
The campaign is said to be costing about $20 million and this may sound huge, but as a portion of Fonterra’s total annual revenue of $20 billion it is not extravagant. Considering also the importance of Fonterra and dairy to NZ’s economy and the poor public opinion of both, it's money well spent
While anti-dairy supporters will go on criticising the co-op for the environmental and animal welfare effects of dairy farming, at least the public will now know much more about the sector’s contribution to the nation – especially via the echo-chamber that is social media.
The campaign promotes the Fonterra brand, showcases what farmers are doing on environmental issues, connects with the urban audience and shows Fonterra’s own suppliers what the co-op is delivering. It won’t stop the ardent anti-dairy campaigners, but at least New Zealanders now have information about Fonterra and the dairy sector to balance and counteract the constant diet of negative, ill-informed comment dished up relentlessly by the wreckers and haters.
