The Country
  • The Country home
  • Latest news
  • Audio & podcasts
  • Opinion
  • Dairy farming
  • Sheep & beef farming
  • Rural business
  • Rural technology
  • Rural life
  • Listen on iHeart radio

Subscriptions

  • Herald Premium
  • Viva Premium
  • The Listener
  • BusinessDesk

Sections

  • Latest news
  • Coast & Country News
  • Opinion
  • Dairy farming
  • Sheep & beef farming
  • Horticulture
  • Animal health
  • Rural business
  • Rural technology
  • Rural life

Media

  • Podcasts
  • Video

Weather

  • Kaitaia
  • Whāngarei
  • Dargaville
  • Auckland
  • Thames
  • Tauranga
  • Hamilton
  • Whakatāne
  • Rotorua
  • Tokoroa
  • Te Kuiti
  • Taumurunui
  • Taupō
  • Gisborne
  • New Plymouth
  • Napier
  • Hastings
  • Dannevirke
  • Whanganui
  • Palmerston North
  • Levin
  • Paraparaumu
  • Masterton
  • Wellington
  • Motueka
  • Nelson
  • Blenheim
  • Westport
  • Reefton
  • Kaikōura
  • Greymouth
  • Hokitika
  • Christchurch
  • Ashburton
  • Timaru
  • Wānaka
  • Oamaru
  • Queenstown
  • Dunedin
  • Gore
  • Invercargill

NZME Network

  • Advertise with NZME
  • OneRoof
  • Driven Car Guide
  • BusinessDesk
  • Newstalk ZB
  • Sunlive
  • ZM
  • The Hits
  • Coast
  • Radio Hauraki
  • The Alternative Commentary Collective
  • Gold
  • Flava
  • iHeart Radio
  • Hokonui
  • Radio Wanaka
  • iHeartCountry New Zealand
  • Restaurant Hub
  • NZME Events

SubscribeSign In
Advertisement
Advertise with NZME.
Home / The Country

Fonterra's catching up, says its top Asia man

Jamie Gray
By Jamie Gray
Business Reporter·NZ Herald·
15 Nov, 2015 08:00 PM3 mins to read

Subscribe to listen

Access to Herald Premium articles require a Premium subscription. Subscribe now to listen.
Already a subscriber?  Sign in here

Listening to articles is free for open-access content—explore other articles or learn more about text-to-speech.
‌
Save

    Share this article

Johan Priem is Fonterra's managing director for Greater China and managing director Asia, Middle East, Africa

Johan Priem is Fonterra's managing director for Greater China and managing director Asia, Middle East, Africa

Company chases high margin consumer and food service side of its business.

Fonterra has been slow to unshackle itself from the commodities-based business model, but it's catching up on the value-added side, the co-op's top man in Asia, Johan Priem, says.

The company's latest result showed the Ingredients side of the business was still the biggest, with normalised earnings before interest and tax of $973 million up, 43 per cent on the previous year's.

Consumer and Food Service came in at $408 million, up 216 per cent on the previous year's.

In terms of the return on capital, consumer and food service represented a 25.5 per cent return, well above Ingredients' return of 9.3 per cent.

Advertisement
Advertise with NZME.
Advertisement
Advertise with NZME.

"We have been known as a company that has provided the world with powders and butter - closer to the commodities-style of product," said Priem, who is Fonterra's managing director for Greater China and managing director Asia, Middle East, Africa.

"Fonterra has been, I would say, rather late by standards of multi-national companies to realise that there probably should have been more focus on branded products and Food Service products earlier on, for the very simple reason that there is more value to be obtained out of each litre of milk sold in that type of business than there is to be made out the commodities-type business," he said.

"The more value that you add to the functionality of the product, the higher the price at the retail level and the higher the margin is for Fonterra,"

On that basis, Fonterra was looking at what it needed to do to catch up.

Advertisement
Advertise with NZME.

The company needed to sort out where it could get to number one or number two in selected categories, having already secured leadership positions in Malaysia, Sri Lanka, Chile and New Zealand.

Bearing in mind Fonterra was not able to "conquer the world" it identified strategic markets of China, Indonesia, Australia and Brazil as where it wanted to number one or two market positions. It has also identified the Philippines, Vietnam, Thailand and Myanmar as important markets.

China is the company's top strategic market and it has already made inroads - 80 per cent of food outlet pizzas have a Fonterra cheese topping.

The Food Service business was clear standout in Fonterra's latest result, thanks mostly to a record performance from key markets in Asia and Greater China.

Discover more

Banking and finance

China's easing of one child policy good for NZ dairy

29 Oct 10:15 PM
Business

NZ milk in line for baby bonus

30 Oct 04:00 PM
Business

Fonterra sells Australian Bega stake

01 Nov 09:30 PM
Agribusiness

Vitamin spin-off boosts company's Bega Cheese returns

02 Nov 04:00 PM

"The value is coming more out of the food service business," Priem said. "Food service is clearly the biggest contributor to the value growth and volume growth we are generating in my market."

The Food Service arm provides Fonterra customers with tailored products and solutions that support their business needs, covering the specialised demands of customers in quick service restaurants, fast food outlets, cafes, restaurants, hotels, bakeries, commercial and institutional catering, and manufacturing.

The Ingredients side supplies the world's leading food companies with standard dairy ingredients such as milk powders and butter, specialised proteins for sports and nutritional beverages.

In Asia, Food Service delivered combined volume growth across the region of 11 per cent, mainly in butter, UHT cream and cheese.

Priem's patch consists of Mainland China, Hong Kong and Taiwan, but since the departure of Pascal De Petrini, managing director of the co-operative's Asia-Pacific, Middle East and Africa business unit, he has taken on that role as well, splitting his time between Singapore and Shanghai.

Priem also sits on the board of Beingmate, the Chinese infant formula company that is now 18.8 per cent owned by Fonterra.

Advertisement
Advertise with NZME.

He said distribution of Fonterra's Anmum infant formula through the Beingmate network was under way, with the first shipments having arrived in China in June.

Save

    Share this article

Latest from The Country

The Country

Fish stress forces King Salmon to reduce harvest

03 Jun 02:26 AM
The Country

King’s Birthday Honours: Two Dames on The Country

03 Jun 01:51 AM
The Country

Cream of the crop: Jack Haddon wins Pukekohe Young Grower title

02 Jun 11:47 PM

‘No regrets’ for Rotorua Retiree

sponsored
Advertisement
Advertise with NZME.

Latest from The Country

Fish stress forces King Salmon to reduce harvest

Fish stress forces King Salmon to reduce harvest

03 Jun 02:26 AM

The fish farmer says its fish are not eating as much as usual.

King’s Birthday Honours: Two Dames on The Country

King’s Birthday Honours: Two Dames on The Country

03 Jun 01:51 AM
Cream of the crop: Jack Haddon wins Pukekohe Young Grower title

Cream of the crop: Jack Haddon wins Pukekohe Young Grower title

02 Jun 11:47 PM
'That's how community works': Volunteers sustain Colville's mail service

'That's how community works': Volunteers sustain Colville's mail service

02 Jun 10:52 PM
Why Cambridge is the new home of future-focused design
sponsored

Why Cambridge is the new home of future-focused design

NZ Herald
  • About NZ Herald
  • Meet the journalists
  • Newsletters
  • Classifieds
  • Help & support
  • Contact us
  • House rules
  • Privacy Policy
  • Terms of use
  • Competition terms & conditions
  • Our use of AI
Subscriber Services
  • NZ Herald e-editions
  • Daily puzzles & quizzes
  • Manage your digital subscription
  • Manage your print subscription
  • Subscribe to the NZ Herald newspaper
  • Subscribe to Herald Premium
  • Gift a subscription
  • Subscriber FAQs
  • Subscription terms & conditions
  • Promotions and subscriber benefits
NZME Network
  • The New Zealand Herald
  • The Northland Age
  • The Northern Advocate
  • Waikato Herald
  • Bay of Plenty Times
  • Rotorua Daily Post
  • Hawke's Bay Today
  • Whanganui Chronicle
  • Viva
  • NZ Listener
  • What the Actual
  • Newstalk ZB
  • BusinessDesk
  • OneRoof
  • Driven CarGuide
  • iHeart Radio
  • Restaurant Hub
NZME
  • About NZME
  • NZME careers
  • Advertise with NZME
  • Digital self-service advertising
  • Book your classified ad
  • Photo sales
  • NZME Events
  • © Copyright 2025 NZME Publishing Limited
TOP