NZ Milk has global goals

The Dairy Board is looking to manage dairy products for supermarket chains around the world.

One of its two main marketing arms, New Zealand Milk, wants not only to supply branded consumer packs of dairy produce for multinational supermarkets, but also to be hired by those chains to manage the entire category of dairy products.

This would include contracts not only to source a complete range of produce such as milk, yoghurt, butter and cheese, but also to run the distribution networks stocking chiller cabinets.

The board's new global marketing director for its consumer brands, Mike Harley, says the board is developing global marketing platforms for important brands to improve synergy, quality and effectiveness across key regions.

It has also hired the United States giant Foote Cone Belding (FCB) Worldwide as its global advertising agency to help it make the transition.

New Zealand Milk does $3.7 billion of business worldwide, and to support that it will spend over $200 million on advertising and promotion this year.

Other Dairy Board executives have said that as multinational supermarket chains become dominant in Northern Hemisphere markets, New Zealand has a once-only chance to lock itself in as the world's main supplier of dairy produce to affluent consumers.

The New Zealand industry is capable of providing every branded item in a supermarket's dairy chiller, guaranteed ingredients to other food manufacturers, and hugely profitable "functional foods" or nutriceuticals.

The drive to become a category manager for these supermarkets is one reason the industry wants to integrate its manufacturing and marketing in a mega-cooperative.

Agriculture Minister Jim Sutton has told dairy farmers this is a key concept of the mega-merger now before the Government.

"The dairy industry would then have the size to launch into acquisitions and joint ventures offshore.

"With enough critical mass, you can do the deals that weave you into the fabric of key markets."

Mr Sutton said that such integration, with the industry participating in marketing branded products all the way down to the retail level, was one strategy for overcoming non-tariff trade barriers which posed a continuing threat to agricultural exports.

Mr Harley said FCB Worldwide was the largest advertising agency in the United States and the fifth-largest internationally, with billings of over $20 billion.

New Zealand Milk managing director David Pilkington said the global advertising contract indicated the increasing size and sophistication of the board's consumer business.

"The decision to move to a global agency reflects the international alignment of our consumer business.

"It is one more clear indication of our determination to become a major player on the world stage as a marketer of consumer dairy products.

"Bringing FCB on board is a very significant step in the overhaul of our marketing and brand development processes across the globe."

The agency won the account after a competitive pitch involving four major advertising agencies, but the Dairy Board declined to name the losers.

- NZPA