Marketing expert says buyer of premium brands may very well be found in China.
An Auckland University marketing expert believes a sale of Fonterra’s consumer brands business could attract Chinese buyers.
The Asian market loves brands that it sees western customers consuming, Auckland University Associate Professor of Marketing Michael Lee said.
Chinese consumers do not want Fonterra-branded milk powder made in China, they want the products that are made and sold in New Zealand, resulting the Daigou system, Lee said.
“I’m taking a punt here, but I wonder if the companies that do buy these brands will be Chinese companies, because that’s where the biggest demand is.”
Whoever ends up buying these brands will buy them for their brand equity.
“Those brands are so valuable. Not only are they iconic brands, but they’re premium brands and whoever is buying them is surely wanting to hang onto that and use that not only in New Zealand but also trans-Tasman and probably Asia.”
Their high value and profile mean he doubts it will be a New Zealand-owned company that will purchase these brands.
Fonterra’s decision surprised Lee because of the frequent criticism that companies such as Fonterra need to do more to add value to their products rather than just sell commodities.
“We need the value-added stuff and the branding, which is exactly what Anchor and Mainland has and that’s where you get the price premium for that intellectual property and goodwill.
“That’s why it’s a surprising move because they are selling the stuff where they get the most premium,” he said.
“It’s a bold move.”
Lee said for a company to make and then brand a product to sell to the consumer is different to the other part of a supply chain where a company is dealing with farmers.
“It’s a massive supply chain that they have from the grass all the way through to the product on the shelf that the consumer gets.
“If they are thinking about how they are going to focus our efforts, getting rid of half of that supply chain – and the side they may feel that they don’t understand as much – it might make sense from a management perspective.”
You can now read the most important #news on #eDairyNews #Whatsapp channels!!!
🇺🇸 eDairy News INGLÊS: https://whatsapp.com/channel/0029VaKsjzGDTkJyIN6hcP1K
