Fonterra's distributors in China are so keen to get their hands on new specialised Anchor milk powders developed for online consumer sales that they've paid to fly a big batch in from New Zealand.
Fonterra Brands NZ said 4000 packets of the products, branded Anchor Immune Support and Anchor Digestion Support had been airfreighted to China as distributors scrambled to be first to market with them ahead of the biggest shopping day in the world, China's 11.11sales.
Another 10,000 packets - Anchor's first in a foil, resealable, upright bag - had followed by ship, said consumer export director Adele Wilson.
The products, part of a drive to premiumise the iconic Anchor brand, mark an expansion from the standard Anchor range available to Chinese households through Fonterra's cross border e-commerce (CBEC) sales route into functional powders and uses, she said.
Covid-19 had also spurred stronger consumer demand for health support products.
The CBEC route had been built from the ground up since the 2016 opening of the cross border e-commerce sales channel between China and New Zealand, and its volume now represents 5 per cent of Fonterra's total consumer business in China.
The total NZ-China CBEC channel is estimated by Mfat to be worth $26 billion to exporters.
Fonterra's CBEC portfolio has been focused on family milk powders, a category valued at $1.4b to New Zealand, of which CBEC sales represent 11 per cent of the total category.
Also key for Fonterra is the maternal and infant milk category, valued at $25b with CBEC sales representing 12 per cent. Both categories are highly competitive.
Fonterra's sales to China through CBEC are growing quickly, Wilson said, with the Anmum brand experiencing year-on-year growth of more than 70 per cent and Anchor brand sales at about 20 per cent.
The most popular segments of the total CBEC channel are cosmetics, followed closely by food and healthcare, mother and child and clothing and footwear categories, Wilson said.
Development of the two new Anchor functional products only started in February, a team effort between Fonterra's scientists, the Takinini, Auckland-based consumer business and Fonterra's China staff, said Wilson.
"It's probably a record for us and enabled by teamwork and really leveraging the depth of our expertise in the ingredients space to apply that directly and quickly to our consumer business and brands."
Fonterra's main CBEC customers are millennials, particularly "digital native" mothers looking for trusted, quality product, Wilson said.
"They can have the same experience people have (buying) in New Zealand. There's definitely a trust element in it."
Fonterra has different online storefronts in China, including a partnership with online giant Ali Baba, offering general trade and CBEC products - exactly the same as can be bought in New Zealand.
General trade sales includes supermarkets and is both online and offline.
General trade products however are required by China to carry full Chinese language packaging. The CBEC enables Chinese consumers to buy the same products as on New Zealand grocery shelves, and in English language packaging.
"It enables us - and other companies - to scale up relatively easily into the Chinese market," Wilson said.
"We have focused on the Anchor Ambien brand, Anchor wholemilk powder in a 1kg bag and skim milk powder. We also do tinned butter and tinned powder and we have a big focus on our Anmum business, maternal products which support pregnancy and Anmum infant formula which is growing very well in this channel."
Wilson said Fonterra Brands NZ was now starting to experiment with the CBEC channel, beginning with the move from the standard Anchor full cream milk product range into higher value demand categories.
Covid had generated new global awareness about general health and in particular immunity support, with demand for support products surging and staying up, she said.
Chinese millennials were also shopping for products for their parents and older family members.
After the reaction from distributors in China, a second production run of the new products was planned.
A New Zealand launch is planned for March and a child immunity support product would be offered in the next quarter.
Fonterra Brands was also looking at market prospects in Southeast Asia, the Middle East and the US in line with Covid demand trends.