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Home / The Country / Dairy

Meet Fonterra's big cheese

APNZ
7 Sep, 2012 05:30 PM6 mins to read

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Fonterra chief executive Theo Spierings. Photo / Chris Gorman

Fonterra chief executive Theo Spierings. Photo / Chris Gorman

Surprisingly little is known about Fonterra's chief executive, Theo Spierings, considering he holds down New Zealand's top corporate job.

Like his predecessor, Andrew Ferrier, he isn't much of one for the corporate limelight.

But after his year as chief executive, Fonterra's PR team thought it was about time the public got to know more about the man in the hot seat.

The affable Spierings is happy to oblige, but it's clear he'd rather be talking about dairying than himself.

"Why was it that you didn't hear much about me, Theo Spierings, because I didn't come to New Zealand to build my own profile.

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"I came here to lead a co-op," he says with unmistakably Dutch directness.

Spierings says he hit ground running when he turned up at Fonterra late last year.

There was the milk price controversy, Fonterra's water quality issues and the trading among farmers share scheme to deal with.

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The former head of Holland's equivalent of Fonterra - Royal FrieslandCampina - sees himself as a co-op man through and through.

While he had done his homework, acclimatising to Fonterra's relevance to the rest of the New Zealand economy took some doing.

"To have a $20 billion company in a country of just 4.5 million people, I don't think you'll find that kind of ratio anywhere on the planet,' he says. "That creates a dynamic around the business that I've never experienced before."

The 1.96m tall Spierings has been in the industry since his early 20s. He's in New Zealand with his wife and three teenage children - each of them born in different countries while he held various posts for Royal Friesland.

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Spierings was an active sportsman in his early days, and played rugby when he was at university.

These days he's into sports that are a bit kinder on the body, like sailing.

His office at Fonterra's central Auckland headquarters in Princes St could be mistaken for just another corporate work room. There's a desk and a meeting table.

A painting from Ferrier's days, hangs on the wall.

Then there's a white board. That's it. All very low-key for somebody in charge of a business that equates to 3 per cent of New Zealand's GDP.

Despite coming from the other side of the world, Spierings' experience could easily mirror any one of his New Zealand contemporaries over the last few decades.

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The industry in the Netherlands, as in New Zealand, was once made up of several dairy co-operatives.

Advances in transport and refrigeration meant the number dwindled to the point where it came down to Royal Friesland in the north and Campina in the south.

Spierings, then a Royal Friesland executive, headed up the merger of the two in 2008.

They were fused together in much the same way as New Zealand Dairy Group and Kiwi Co-operative Dairies were combined to form Fonterra in 2001.

There is a north-south divide in Holland. It's Catholics in the south and Protestants in the north. Spierings, a Catholic, comes from the south, but his preference was always to work in the business-oriented north.

With his southern accent and career at Royal Friesland, he raised a few eyebrows as he went on to steer the FrieslandCampina merger team.

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Spierings left Royal FrieslandCampina to form his own company in 2009 before his appointment to Fonterra.

Fonterra and Royal FrieslandCampina have their similarities - although Fonterra is bigger in terms of sales.

Spierings says there are some key differences.

"For me it's that our farmer directors on the board are really big entrepreneurs, whereas in the European context they are normally relatively small farmers with 80 or 100 cows, so there is a different mindset.

"The entrepreneurial skills sitting at the board-room table make quite a big difference, in my opinion," he says.

"The size of Fonterra in New Zealand is massive.

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"You can only experience that when you do it.

"You can read about it, and you can think about it, but you can only get it into your system by living in that position."

But Spierings says the Fonterra brand is under-utilised.

"We don't really make the maximum mileage out of it - not at home and definitely not abroad - because this is a seal of guarantee of quality out of a clean and green country called New Zealand."

Spierings is gung-ho regarding overseas investment, particularly in China.

A big part of Fonterra's thinking now centres around so-called milk pools, and the gaps opening up around the world between supply and demand - particularly in China, India, the Middle East and North Africa.

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"We are a big player but because of the big imbalance between supply and demand around the world, globally traded volumes will increase," Spierings says.

"What I have said to our farmers is that we need to stay relevant to the market.

"We have the milk pool but we have to tap into other milk pools in the world, otherwise we will lose market share," he says.

"We need to think over the borders when it comes to milk pools and markets."

Already one in five litres of New Zealand milk is exported to China.

"If we don't protect the export play into China, then we might lose that, and if that milk flows back onto the global dairy trade, then the milk price will go down.

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"We supply China from New Zealand but we definitely want to be in the China milk pool as well," he says.

Spierings spoke about the need to retain Fonterra's relevance in the world.

"That means we have to collect more milk, not just New Zealand milk."

Fonterra has three farms in China and is about to add two more. Altogether the five, farms, which are near Beijing, will form what Fonterra calls a hub of 25,000 cows.

Fonterra is already planning another hub, possibly close to Shanghai. At the same time, Fonterra is down-sizing its presence in the United States and Europe as those markets have become less relevant over the past decade.

Long term, Spierings says dairying is in a good space, despite the present market volatility.

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And amid the commodity commotion, Fonterra will be lifting its profile, so in the year ahead we can expect to hear more from the direct-talking Dutchman - now firmly positioned among the country's most powerful businessmen.

Theo Spierings
* Fonterra chief executive
* Born: The Netherlands in 1964
* Family: Married with three children
* Education: MBA, Glasgow University
* 2007: Acting chief executive of Royal Friesland Foods
* 2008: Oversees merger with Campina

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