Fonterra's US chief has eye on client

By LIAM DANN primary industries editor

Anyone who has visited America knows that it is probably the most customer- focused economy in the world.

It should come as no surprise, then, that the man leading Fonterra's drive to refocus the business towards the customer rather than the product is also in charge of the company's US operations.

Taranaki-born Don Learmonth has spent 10 years working around the world for Fonterra or its legacy companies.

"I've been in Egypt for four years, I was in Bahrain for 18 months and I was in Hamburg, Germany, for two years," he said.

Now based in Pennsylvania, he carries the impressive-sounding title of president, Fonterra USA.

Learmonth joined the US business 18 months ago as senior vice-president of sales.

"My job was to put in a new sales structure, to shift things to a customer focus instead of a focus on products," he said.

At that time the company had three sales people servicing each customer.

"We had one person selling protein, one selling cheese and one selling powders," he said.

Now the company attaches one salesperson - handling all three products - permanently to each customer.

At the same time Fonterra USA segmented its customer base to focus more heavily on its large regular customers.

A separate structure was set up to deal with those customers who were not quite so loyal.

Fonterra has 500 customers in the US, but about 12 of those contribute 60 to 70 per cent of total volume and revenue.

"So we are very much focused on those larger customers and satisfying the needs that they have," Learmonth said.

Those customers tended to be the multinational food and nutritional companies.

Despite having some big customers, Fonterra USA is a relatively small player in that market.

"The 250,000 tonnes of product we sell is a very low percentage of the total US market," Learmonth said. "The cheese market in the US, for example, is six million tonnes of cheese. We sell less than one per cent of that."

Fonterra USA is primarily an import business, although it does manufacture some casein.

It was well regarded and recognised as a quality supplier and had a strong position in the protein market, he said.

For the past three years Fonterra USA has grown at a phenomenal annual rate - between 15 and 20 per cent.

That growth was likely to slow this year because of supply issues, Learmonth said.

"We're now in a situation where global commodity markets are quite high-returning."

Fonterra had decisions to make about where to place product, and right now powders were the most valuable.

"We are not a big powders market, we are predominantly cheese, protein and cream, so we're quite constrained," Learmonth said.

"Our own strategy is integrally linked with Fonterra's global strategy."

Fonterra USA is distinct from the Dairy Concepts joint venture the company has with Dairy Farmers of America (DFA).

"But the joint venture with DFA is strategically important because it aligns us with the major player in the US market," Learmonth said.

"It helps at a customer relationship level. But more importantly it gives us a political insight into what's going on in the dairy industry."

It is Learmonth's experience in customer management that brought him back to New Zealand last week. He is leading a project group called customer planning and management.

The project was a re-examination and refocusing on customer management for Fonterra's entire global operations, he said.

The group has been putting in place a sales methodology about how Fonterra should interact with customers.

Different customers required different approaches, Learmonth said.

For example, US customers were more open with their views and quicker to get down to business than those in Europe.

"So there is a shorter time-frame to unlock opportunities."

As Fonterra's business evolved from a product to a customer-led organisation, it needed people with different sets of skills, he said.

"The way we actually manage the customer base requires a new approach," he said.

The work has been going on since June. Last week Learmonth was involved with the final workshop.

"That's the night job. The day job is running the business."