Cheeseburgers in their billions include Fonterra slices every year.
This month in Auckland we hosted a showcase of Fonterra’s foodservice business, presenting our key products, how they’re made and how they work in a restaurant setting, and indeed tasting some of these culinary creations.
In China, I’m fortunate to see the impact that New Zealand dairy is having on the culinary scene through our Anchor Food Professionals (AFP) brand, as consumers here increasingly appreciate how dairy makes food better.
We work with a wide range of customers from global restaurant brands to the local chains. One of our key customers is a Chinese beverage brand with about 10,000 stores across the country. That’s a large footprint and shows you the size of the opportunity here in China.
Our AFP UHT cream is a key ingredient for the cream topping their milk tea products. Our specially formulated cream range is renowned for its stability, producing a tea macchiato topping and consistent rosettes on cream cakes.
But it’s not just beverages that our foodservice products are seen in, nor are we present in China alone. Our product portfolio spans butter, UHT creams, cheeses and mozzarella, to name a few. Through our Foodservice business, these products show up in cafes, high end restaurants, bakeries, tea shops and quick service restaurants (QSR) in more than 50 countries around the world.
To put our numbers into perspective, we can produce enough sliced processed cheese for up to 3 billion cheeseburgers each year. Based on a 2mm thick piece of our processed cheese, if you stacked this product beside itself it would stretch across 6000km, which is about the distance from Auckland to Perth, leaving you 700km of cheese to spare.
Greater China represents a large slice of our foodservice operating profit, at 78% in FY24. This reflects the value that Chinese chefs, bakers, cooks and ultimately consumers place on our delicious products.
We have grown our foodservice business from generating $2 billion in revenue in 2017 to $4bn in revenue 2024, largely driven by our success in Greater China. Our strategy now is to take what we’ve learnt in Greater China and replicate it across other growing foodservice markets as we focus on growing even more value through our foodservice business.
We plan to do this by:
• Maintaining our leadership position in China
• Selectively accelerating growth in markets outside of China
• Continuing to invest in local application centres to meet customer needs
• Delivering new product innovations
• Investing in manufacturing capacity to increase milk allocated to foodservice products.
Fonterra’s Foodservice business uses around 15% of the co-op’s milk solids collected and this is forecast to grow over time as we allocate more to this high performing business. We’ve recently announced an investment of $150 million into a new UHT cream plant at our Edendale manufacturing site, which will allow us to increase production of this product valued by our foodservice customers.
I see immense potential in our foodservice business as we focus on growing value through this business in China and beyond.
By Teh-han Chow. Chow is Fonterra’s president for Global Foodservice.
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