Fonterra has opened its sixth Food Application Centre in Wuhan, China, to enhance its presence in the foodservice sector. The new facility will serve 50 cities and supports Fonterra’s customer-centric strategy by enabling collaboration with foodservice clients. With the bakery sector resilient despite economic challenges, Fonterra’s innovative approach and high-quality New Zealand dairy products position it to capitalize on growing demand in China.
Fonterra, a leading global dairy cooperative based in New Zealand, has bolstered its presence in China’s foodservice sector with the launch of its sixth Food Application Centre (FAC) in Wuhan. This strategic expansion aims to meet the increasing demand for innovative dairy-based solutions from foodservice customers, particularly in a region that generates 20% of China’s GDP.
The new facility allows Fonterra to service around 50 cities within a three-hour radius, enhancing its ability to cater to the growing needs of clients in the bakery, beverage, and dining sectors. The FACs play a crucial role in Fonterra’s customer-centric strategy, featuring fully equipped kitchens where approximately 50 chefs collaborate with clients to develop new recipes using Fonterra’s Anchor-branded products, including cream, butter, and mozzarella.
Despite facing challenges from a sluggish economy, China’s foodservice sector has shown resilience, especially in the bakery channel. With around 350,000 bakeries across the country, this stable market presents significant opportunities for Fonterra. The company’s foodservice business in Greater China reported a year-on-year EBIT increase of $100 million, contributing to an impressive overall return on capital of 19.6% for the division.
Justin Dai, Fonterra’s Vice-President for Foodservice in Greater China, attributes this success to the company’s innovative approach, strong customer focus, and high-quality New Zealand-sourced dairy products. Fonterra has successfully adapted to the rapidly changing market conditions in China, maintaining a leading position, particularly in Tier 1 and Tier 2 cities like Shanghai and Beijing, while also expanding its reach into lower-tier cities.
Digital innovations are also crucial for Fonterra’s competitive advantage. The company recently launched a smartphone app that offers customers recipes, market insights, and links to the most suitable Fonterra products for specific dishes. This integration of digital tools enhances customer engagement and further solidifies Fonterra’s position as a leading supplier in China’s foodservice sector.
Additionally, Fonterra has received strong support from the Chinese government. Earlier this year, Chinese Premier Li Qiang met with New Zealand Prime Minister Christopher Luxon at Fonterra’s Auckland office, highlighting the cooperative’s positive trade relations with China. “Trade is our friend,” emphasized Dai, noting the robust trade dynamics between the two nations.
As Fonterra continues to leverage its Anchor brand and invest in customer-focused capabilities like the FACs, the cooperative is well-positioned to capitalize on the increasing demand for dairy products in China’s dynamic and fragmented market.
