Fonterra Greater China update with Teh-han Chow

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Sustainability and the environment are big news in China at the moment, with the government aiming to achieve carbon zero by 2060.

Fonterra places a lot of importance on making its business sustainable in New Zealand and is doing its bit to help China achieve its goals as well, Fonterra's Greater China CEO Teh-han Chow says.

"One of the hot topics in China has recently has been about carbon emissions, ecological conservation and biodiversity," Chow told The Country Sport Breakfast's Brian Kelly.

Fonterra recently launched a sustainability campaign involving its foodservice business, which supplies butter and creams to bakeries throughout China, Chow said.

"We've been working with the China Environment Protection Foundation and have set up China's first-ever project fund specially designed for bakery chain stores."

The aim was to raise public awareness for environmental protection projects, leveraging the scale Fonterra had through its bakery customers and their consumers, Chow said.

The project's first phase was about promoting sustainable packaging of dairy cream cakes.

The second phase aimed at raising awareness of ecological protection, through a tree-planting campaign in a national park with Fonterra customers.

"We intend to hold a review ceremony with the foundation at our upcoming CIIE, which is the big China International Import Expo show in early November," Chow said.

"This year at our pavilion at the expo, sustainability will be our theme and we'll have a series of activities lined up that will share our sustainability story - that we do so well on in New Zealand - with our partners and stakeholders in China."

The co-op's next step is to encourage customers to use low carbon ingredients in bakery products.

Meanwhile, Fonterra's Foodservice business, Anchor Food Professionals (AFP) reached a milestone last week, becoming a NZ$3 billion annual revenue business.

China had a large portion of that figure, Chow said.

"Our Foodservice business, along with our ingredients business, have been early movers in China going back some 30 to 40 years.

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"If you imagine, back in the day, western foodservice was just comprised of servicing a few international hotels, but as China has developed at this phenomenal pace ... we've seen demand increase for high-quality creams, butter, cheese and other food products."

Because Fonterra was the first mover in China and across the region, it had the benefit of ingraining taste for New Zealand grass-fed dairy products.

As a result, over the past 12 months, the team introduced more than 100 new applications for the beverage and dining channel, and demonstrated 170 new applications for its bakery customers, Chow said.

"We're continuing to expand into new cities, new channels, new applications."

For example, in South East Asia, Fonterra wanted to apply what it had learnt from the Greater China business to customers in the region - "where it works," Chow said.

"We'll probably make some mistakes along the way, but we'll continue to adapt our model in ways that meet local needs.

"We've had a lot thrown at us, not the least of which was Covid, but we've shown that we can thrive."

One of Fonterra's long-term aspirations was to increase the amount of milk solids going into foodservice by 50 per cent by 2030, Chow said.

"It does take a lot of hard work, and it's been a long road to get there, but when you have really sustainably produced ... high quality, nutritious, innovative and tasty products, I think we have a really strong right to win."

Also in today's interview: Chow talked about how Fonterra continued to collect milk in New Zealand during Covid-19 restrictions.