Fonterra has signed a research and development partnership with one of its long-standing customers in China, Shanghai-listed supplements maker BY-HEALTH.
Komal Mistry-Mehta, director of the Fonterra unit, NZMP Sports and Active Lifestyle, said the partnership would focus on developing innovative nutritional solutions for the health and wellness market.
"We'll work together to explore health research and new product development that will deliver health benefits to consumers around the world and, in particular, consumers in China," she said in a statement.
Mistry-Mehta said the two organisations have complementary skills and knowledge in the health and wellness market.
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"We have a long-history of pioneering innovation in functional dairy proteins, milk fat globule membrane and probiotics," she said.
"BY-HEALTH has expertise in vitamin and dietary supplements which presents a new opportunity for us."
"They also have access to extensive consumer insights and trends through their online sales platform which now accounts for 20 per cent of their business," she said.
Mistry-Mehta said people were becoming more aware and proactive about health and wellness.
The global probiotics market is seeing significant growth and Euromonitor forecasts the probiotics supplement segment will grow by 7 per cent over the next five years.
BY-HEALTH researches, develops, produces and sells dietary supplements, including protein powders.
The company last year bought the Australian probiotics enterprise Life-Space Group for A$670 million.
In 2015, Life-Space entered the Chinese market through cross-border e-commerce and procurement service, taking a leading position on China's e-commerce platform Alibaba, including Tmall and Taobao.