At the heart of our Co-op is the production of world-class, innovative dairy ingredients that customers use to make the products enjoyed by consumers all around the world.
With 95% of Fonterra farmers’ milk sold in about 120 markets around the globe, the Co-op ships more dairy products than anyone else, with ingredients making up the bulk of those exports.
To give you a flavour of the sheer scale of the Ingredients business, in FY23 it represented 80% of Fonterra’s milk solids sold, contributing $17.4 billion in revenue and $2.6 billion in gross profit.
New Zealand Milk Products (NZMP) is Fonterra’s ingredients and solutions brand with offices in 13 global locations and a vast reseller network.
The NZMP brand offers one of the broadest ranges of ingredients and solutions in the industry – from high quality powders to highly advanced and specialised ingredients – and includes products that can be found at the heart of some of the world’s most famous food and nutrition brands.
Richard Allen, President Global Markets Ingredients, says the Co-op believes it can grow further value by focusing on being a business-to-business dairy nutrition provider.
“Using our extensive expertise in dairy science and innovation we can partner with customers to co-design value-added products and solutions that can be taken to market and in turn unlock greater value for the Co-op’s shareholder farmers”, says Richard. “Fonterra has a long history of world leading innovation. From spreadable butter to whey protein concentrates, our Co-op has consistently created ingredients that lead the market. Much of this innovation stems from our Fonterra Research and Development Centre (FRDC) where a team of over 300 scientific, technical and support people apply their expertise to create new developments in dairy ingredients, unlocking the mysteries of milk that make it a superfood.”
Moving more milk into some of the more specialised ingredients, such as functional proteins, coming out of FRDC gives Fonterra the ability to create more value by tapping into the immense and rapidly growing health and wellness market, targeting the areas of physical, patient, digestive and mental wellness, plus immunity.
Some of the premium ingredients the Co-op produces are:
Whey Protein Concentrate
A rapid absorbing protein containing naturally high levels of amino acids compared to other protein sources. It has high nutritional properties, helping to support muscle and tissue health, which makes it an ideal source of protein for athletes through to the elderly and patients.
Hydrolysate
A form of ‘pre-digested’ protein that is easily digested and rapidly absorbed, and suitable for paediatric use. Used in medical nutrition to provide high-protein, high-calorie nutrition products for patients requiring tube feeding, it can also be used to protein fortify food and beverages.
Rennet Casein
A naturally occurring protein found in human and cow’s milk and used to deliver maximum levels of body and functionality to processed cheese. Made from pasteurised New Zealand skim milk, it is a natural source of amino acids and carbohydrates.
Whole Milk Powder UHT
A creamy and highly stable whole milk powder for UHT, ideal for recombined UHT milk and milk drinks. Many uses including bakery goods, confectionery, ice cream, yoghurt and supplements.
Alongside these specialised ingredients we also have a portfolio of other high value ingredients such as milk powders, butter and cheeses. Sales of Reference Products such as Whole Milk Powder and Skim Milk Powder, especially on Global Dairy Trade (GDT), inform the Farmgate Milk Price and capitalising on New Zealand’s unique pasture-fed, provenance and sustainability story is key here.
Making it easier for customers to buy product is another important focus for the Ingredients business. Along with GDT, direct to customers and/or through resellers, NZMP has created a digital tool that offers customers new ways to engage with our Co-operative.
Called myNZMP, it’s a simple, always-on, self-service option, and a key platform for Fonterra’s Ingredients channel. With a personalised interface, myNZMP allows customers to browse and re-purchase NZMP product, track and manage their orders, organise their GDT product shipments and access market and purchasing insights.
NZMP also has a tool to give customers confidence that the products they are buying are made with sustainability as a high priority. The NZMP Carbon Footprinter gives customers the ability to access the latest emissions data for major NZMP products, as well as forecast potential emission reductions for those products out to 2030, which are based on the assumption that Fonterra successfully achieves its climate targets.
The Carbon Footprinter is an example of tools the Co-op is creating to help customers understand how Fonterra’s climate targets relate to the products they purchase, an important part of strengthening relationships with customers and creating value for the Co-op’s farmer owners.
These partnerships with our customers, centred around shared innovation and climate goals, coupled with the Co-op’s strength in manufacturing, is a powerful way forward for our Ingredients business.
Each month we will bring you stories highlighting what we’re doing to create sustainable value from your milk. If there’s a specific market or story you’d like to hear about, contact us at nzfss.enrich@fonterra.com.