As China moves forward with its Healthy China 2030 initiative, a government-led programme to improve public health, there has been an increase in demand for health and wellness solutions, especially when it comes to nutrition.
For example, the recommended daily intake of dairy has increased from 300 to up to 500 grams per person per day. That's potentially up to 700,000 tonnes of dairy consumed every day across the country - equivalent to more than 30,000 Fonterra tankers full of milk every single day.
For more than 50 years, Fonterra has achieved successful growth in China by providing nutritious and high-quality dairy products for customers and consumers. And it's clear that the opportunity in China continues to be big.
Your Co-op in China
Teh-han Chow is Fonterra's CEO for Greater China, a region including the Chinese mainland, Taiwan, Hong Kong, and Macau.
Fonterra China reported an increased profit after tax in this year's interim results - up $94 million to $232 million NZD, primarily due to strong performance in Foodservice, which is one of Fonterra China's three businesses, alongside Ingredients and Consumer Brands.
"The region has demonstrated resilience and we've seen strong market performance in recent years, thanks to the hard work of our near 700 strong team. We're confident that our market share will continue to expand this year and beyond," Teh-han says.
Innovating to meet trends
There are five Fonterra Application Centres (FAC) in China, which are focused on developing new products tailored to Chinese preferences in taste, culture, and trends.
"In China's fiercely competitive food market, consumers are always on the lookout for the next big thing. We must adapt quickly to market trends and continuously innovate by creating unique products that are nutritious as well as meeting taste and quality needs," Teh-han says.
One example of this is Fonterra's work with Ningii, a leading Chinese lemon tea brand, to launch a new green tea with lemon cream topping to meet rising demand for new styles of tea among young Chinese.
Fonterra has recently worked closely with Mengniu, a leading Chinese dairy manufacturer, to create six ready-to-drink beverages. The drinks make use of our milk protein concentrate, whey protein concentrate, and calcium caseinate products to meet a growing market for nutritious ready-to-drink beverages in China.
"Over the years, we've seen strong growth by partnering and collaborating with Chinese customers in nutrition and innovation. We'll continue to focus here to make the most of the Chinese market potential, and to bring value back to Co-op farmers," Teh-han says.
Duty free products
Despite COVID-19 restrictions and challenges, China has remained one of the largest and most important markets for the Co-op, and our business in China has maintained steady growth.
"Recently we've seen the relationship with China strengthen even further. All dairy products imported to China from New Zealand became duty free on 1 January 2024, which is a big milestone and win for us and our Chinese customers."
This comes 15 years after China and New Zealand's Free Trade Agreement was first signed.
