Chow was also keen to explain what foodservice actually means.
“Food service generally refers to the business of preparing and serving food and beverages outside of the home,” he told The Country Sport Breakfast’s Brian Kelly.
Chow said this covered a wide range of establishments, including restaurants, cafes, bakeries, beverage outlets and quick-service restaurants.
“In a New Zealand context, if you were to have a hamburger, or … sandwich, … a sausage roll, or … a pizza, that would be taking place at a food service outlet.”
Chow said Fonterra’s Foodservice business supplied high-quality dairy ingredients to those establishments through its Foodservice brand, Anchor Food Professionals.
Products include UHT cream, cream cheese, butter and cheese.
Chow said the business brought in $463 million in EBIT in the financial year 2024 (FY24).
“So that represents about 30% of the co-op’s earnings.”
China continued to be a strong market for Fonterra’s Foodservice business despite recent headwinds, such as the cost of goods increasing.
“We supply our products to about 500 cities across China, including some rural ones,” Chow said.
FY24 was a particularly strong year for the Foodservice business in China, with EBIT up $100m to $463m.
The co-op has also seen growth in the Southeast Asian market.
“We’ve seen a three-and-a-half-fold increase over the last three years,” Chow said.
“In Southeast Asia, we supplied to over 50,000 food operators across the region.
“Our customers range from bakeries to restaurants, and even small local street food stalls.”
As for the future of the business, Fonterra continued to focus on innovation, Chow said.
“It’s one area where we can drive advantage for our food service business.”
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He said innovative products would hopefully lead to new markets, segments, and customers, and drive demand.
Anchor Easy Bakery Cream, launched last year, was a good example.
“It’s a new type of cream that we’ve targeted towards the mass mid-tier segment of the cream market because historically we were targeting the top tier segment,” Chow explained.
He said the strategy had paid off, with “very positive outcomes”.
“We have over 400 new customers coming on board within the first six months of launch, accessing a part of the market that we previously weren’t targeting.”
Chow said Fonterra would continue to work with customers to develop recipes and ideas for its products, to be able to meet local consumers’ needs.
“I think the passion of our Foodservice business, after all, is to tickle the local taste buds.”
