Only grass-fed cows give the ‘yellow oil’ butter prized by a growing China market.
Sunshine, grass and rainfall feature strongly in Fonterra’s message to its foodservice and consumer customers in China, as the market grows in its sophistication and expectations.
Teh-han Chow, Fonterra’s greater China CEO and global head of foodservice highlighted the shifts in the enormous market at the opening of Fonterra’s exhibit at the Bakery China expo, held in Shanghai.
The multi-hectare trade show is the largest of its type in the world, drawing in almost half a million people over its four days.
Showcased are the latest techniques, equipment, ingredients and foods, all aimed at a sector of Chinese food supply that has experienced a compound annual growth rate of 10% for the past eight years with an anticipated annual value of US$55 billion by 2027.
The expo was also an opportunity for Fonterra to launch a new commercial cooking cream aimed specifically at the mid-tier commercial baking sector.
The co-op’s presence was boosted by Fonterra’s brigade of 50 in-house chefs, busily prepping and cooking products for sampling throughout the expo.
“We are continuing to see traditional Western bakery products develop, whether croissants or birthday cakes, but we are also seeing traditional Chinese bakery products replacing the likes of lard or vegetable-based oils, with dairy,” said Chow.
Consumer awareness of dairy’s value as a nutrient source has been propelled along thanks to the government raising its recommended daily serving of dairy from 300g to 500g in 2022.
China has looked hard at how Japan achieved an increase in average height following the introduction of daily milk consumption.
Chow said the Japanese experience with an aging population is also increasing understanding about the value of dairy protein consumption in later life.
“Where Japan’s demographic profile is now is where China will be in 2050. We can learn from Japan.
“We also have some other mega trends lifting consumption. We have a middle class the continues to grow and urbanisation continues to rise with urban people tending to consume more dairy, thanks to greater access to products and outlets.”
Riddett Institute research released last year found significant regional differences in how milk is consumed.
In an intensely competitive market, Fonterra is pushing hard on NZ’s “grass fed, ‘green to gold’”with greater emphasis upon the sustainable, natural aspects of Kiwi milk production contributing to a healthier final product.
It is an invaluable selling point in a fiercely competitive market starting to be tapped into by well-financed overseas and local companies.
“In Chinese there are two characters for butter that literally mean ‘yellow oil’, and you can only get yellow butter by feeding cows grass. There is a growing awareness of being ‘natural’ and we have a role in educating consumers about that,” Chow said.
Similar messages are being signalled in other Asian markets. In South Korea Fonterra ran a “green to gold”-themed promotion with success last year.
The co-operative is also exploring options to offer a licence for customer companies prepared to pay a premium to include the Fonterra logo on their ingredients list, similar to “Intel Inside” for Intel computer chips.
With Fonterra keeping its consumer brands in China, Chow said it has a good opportunity to tie the Anchor brand tightly across food service and consumer products, doubling down on consumer loyalty.
While much may have been made about the slowdown in the Chinese economy, Chow said opportunities remain plentiful as the middle class continues to rise and dairy consumption retains its healthy reputation.
• Rennie travelled to the Bakery China Expo in Shanghai with assistance from Fonterra.
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