FDBusiness.com

2 Apr 2012 — Fonterra Co-operative has outlined details of its Group Strategy Refresh which aims to grow volumes and value by focusing more tightly on emerging markets and products that meet growing consumer demand for dairy nutrition.

Fonterra chief executive, Theo Spierings, said the Strategy Refresh was built on an in-depth look at the co-op’s strengths, social and economic trends as well as underlying projections for a marked increase in global demand for milk.

“Strong economic and population growth in emerging markets is driving a situation where global demand for milk is forecast to grow by more than 100 billion litres by 2020, with New Zealand expected to contribute only five billion litres of additional supply by that date.”

Spierings said the strategy refresh contained elements to grow volumes, target high-value areas of nutritional need and execute these plans at speed. He added. “We call it the Three Vs volume, value and velocity. With overall demand growing, we need to grow volumes to protect our position as the world’s leading dairy exporter. In addition, nutritional needs, particularly among the young and the elderly are getting more urgent and specific, which is where we have the capability to add significant value.”

The full strategic refresh amounts to over 100 discrete projects many already underway to focus Fonterra’s efforts going forward.

It includes:

•             A strong push on the fast-growing emerging markets of China, ASEAN and Latin America where Fonterra already has a strong presence.

•             Optimising the New Zealand milk business to drive cash and improve return on capital.

•             Building integrated milk pools (secure, high-quality sources of milk integrated with Fonterra’s business) offshore to bring higher value returns back to New Zealand.

•             Growing volumes of higher value consumer branded and out-of-home nutrition.

•             A tighter focus on meeting the advanced nutrition needs of mothers and babies, as well as ageing populations

Fonterra Chairman Sir Henry van der Heyden said the Strategy Refresh was timely as the Co-op embarks on its second decade of operations.

“This is an exciting time for Fonterra. For well over 100 years, New Zealand dairy farmers have gone out in the world to seek markets for our safe, high quality dairy products. Equipped with this strategy we are now taking decisive steps to understand and meet nutritional needs in some of the world’s most exciting growth markets to fulfil Fonterra’s unique vision to be the natural source of dairy nutrition for everyone, everywhere, every day,” Sir Henry said.