Fonterra eyes South Korean potential

South Korea is New Zealand's fifthlargest cheese market, worth $US50 million (NZ$70 million) a year - comparable to New Zealand's cheese exports to the United States.

As New Zealand marks the one-year anniversary of its free trade agreement (FTA) with South Korea, Fonterra Cooperative Group is gearing up to take advantage of huge potential for its dairy products there, particularly cheese.

Since the FTA was signed in December 2015, New Zealand has experienced a 16% growth in exports of food and beverage products to the area.

The country is New Zealand's fifthlargest cheese market, worth $US50 million (NZ$70 million) a year - comparable to New Zealand's cheese exports to the United States.

New Zealand's new annual duty free quota of 7000 metric tonnes of cheese to Korea will increase by 3% a year.

Tariffs on cheddar and block mozzarella will be removed after seven and 12 years respectively, with all cheese tariffs eliminated and quotas removed after 15 years.

Quotas and tariffs on butter, anhydrous milk fat and infant formula will also be phased out over 15 years.

Fonterra Korea country manager Jason Murney said Fonterra has seen strong interest in its products off the back of the agreement, reflecting the growing demand for high quality dairy in Korea.

"The FTA will help Fonterra deepen its commercial relationships in the market over time, as our access continues to increase. We have already seen positive results, with government import statistics showing that New Zealand's share of the Korean cheddar market has grown to over 60% in 2016, up from 50% in 2015."

So far Fonterra has developed a new cheese specifically designed for pizzas.

This will help the Co-operative meet Koreans' growing taste for pizza and fusion foods, he said.