NZ's pasture-raised and grass-fed milk is promoted in China as a strong differentiating point for Fonterra’s products. Photo / Christine Cornege
NZ's pasture-raised and grass-fed milk is promoted in China as a strong differentiating point for Fonterra’s products. Photo / Christine Cornege
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China’s economy is expected to grow by nearly 5 per cent this year, but that’s not necessarily a modest amount, Fonterra’s chief executive Greater China, Teh-han Chow says.
“While that doesn’t sound like a strong number; when you have the scale of China’s economy,it is a really significant number,” he told The Country Sport Breakfast’s Brian Kelly.
Chow put it into perspective.
“A five per cent growth in GDP is around the size of Switzerland’s economy, which is ranked the twentieth economy in the world.
As for dairy, Chow said Fonterra was seeing some “bumps along the road right now”, including weak consumer sentiment and excess milk coming off strong domestic dairy production.
However, he said the long-term view on dairy consumption was positive.
“We continue to see some great opportunities.”
Chow said one of these opportunities was the “Healthy China 2030 initiative”, a government-led campaign to improve public health.
“So we’ve seen an increase in demand for health and wellness solutions, especially when it comes to nutrition.”
Chief executive of Fonterra’s Greater China business, Teh-Han Chow.
Chow said that a couple of years ago the national health authorities recommended daily intake of dairy to be increased from 300 grams to up to 500 grams per person per day.
“So if you do the maths, you take 500 grams, times 1.4 billion people; that’s 700,000 tons of dairy consumed every day.”
This was good news for Fonterra, he said.
“That’s the equivalent to something like 30,000 Fonterra tankers every single day.”
An increasing urban population also created opportunities for dairy, Chow said.
“In China, the per capita dairy consumption in urban areas is more than double that of the rural, so when you have a growing urban population, that can drive demand for dairy products.”
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Overall, Chow said Fonterra’s Greater China team was doing “pretty good”, with an increase in profit after tax in the recent interim results.
“We were up $94 million to $232 million – so that’s a call out for the strong performance that we’ve had in our Foodservice channel.”
The co-op was focused on innovation and sustainability to create more value for customers and farmers, he said.
“We have five application centres, focusing on developing new applications for dairy products and helping our customers switch to dairy to adapt to some of the market trends that are going on.
“We’ll be opening a sixth application centre later this year.”
Chow said New Zealand’s pasture-raised and grass-fed milk was promoted as a differentiating point for Fonterra’s products.
“Thanks to the great work that our farmers are doing, I think customers and consumers can see Fonterra having really strong credibility in this area.
“So I think that there’re a lot of opportunities for us in the sustainability space.”
