Fonterra sees double-digit growth in Malaysia

Jose Miguel Porraz-Lando, who is managing director Fonterra Brands Malaysia and Singapore, says Malaysia continues to be an important linchpin for the dairy co-op.

Fonterra's Malaysia operation, which turned 40 last month, is enjoying double-digit growth in terms of both value and volume, says one of the co-operative's top executives in the region.

Mexico-born Jose Miguel Porraz-Lando, who is managing director Fonterra Brands Malaysia and Singapore, said Malaysia continues to be an important linchpin for the dairy co-op, both as a market in its own right but also as a stopover point for Fonterra product destined for other markets.

Malaysia counts as one of Fonterra's four "leadership" markets - markets where it plays a leading role in the local dairy sector. The others are New Zealand, Chile and Sri Lanka.

Aside from its position in the Malaysian market, the operation also takes in New Zealand milk powder, reprocesses it into other products for sale to 13 other countries throughout Asia, the Middle East and Africa.

Even though Malaysia is only 6 per cent self sufficient in dairy production, the country is a top 10 dairy exporter in its own right by virtue of its re-exports.

Fonterra established its first Malaysian manufacturing facility, Susumas, in 1992 and its second, Dairymas, in 1999.

Over the last six years, the co-operative has invested close to 60 million ringgit ($20 million) in upgrading its infrastructure and plans to spend another 20 million ($6.4m) this year.

Fonterra's Susumas site has the capacity to process and pack 30,000 tonnes of milk powder every year. It produces Anlene, Anchor, Anmum and Fernleaf products which are supplied to around 20,000 local retail outlets and exported to countries across the region.

The Dairymas site has the capacity to process around 16,000 tonnes of yoghurt and cultured milk products each year, producing CalciYum, Solivite and Anlene brands for local consumption.

Harvard educated Porraz-Lando joined Fonterra in 2003 and has held several senior executive positions in Chile, New Zealand, Australia and Vietnam before his appointment to his current role.

He said Malaysia is one of Fonterra's eight most important global markets and the co-operative is focused on continuing to build its presence in the country.

"Forty years ago we started importing finished goods from New Zealand and started selling and distributing them across Malaysia," he told the Herald.

"Over the years we began creating new brands and the first brand that we began to develop here was our Fernleaf brand, which soon became a best seller," he said.

"Since then we have been successful in understanding consumer needs in Malaysia."

Lactose intolerance is a big issue in Asia, which means a large chunk of the population is calcium deficient and at risk of developing osteoporosis, he says.

The big trend playing out in Asia the sharp increase in the 40-years plus demographic.

"We used to be a very young country in the 60s and 70s," he says.

"Today our population growth has dropped to just under 1 per cent, which means there is going to be a huge demographic change."

With a population of 30 million, Malays each consume 44 to 45 kg milksolids of dairy per year, increasing at 1 kg per capita year.

That compares with 66 kgs a year for Singaporeans and 230 kgs for New Zealanders, meaning the industry has the potential for substantially more growth.