An application centre was where new products were tested and developed, and the co-op already had four in China.
But the new centre, which opened on Tuesday, was different as it would focus on beverage applications.
The co-op’s other centres concentrated on developing food products, such as steamed dumplings with mozzarella, cream that did not require refrigeration, and cream cheese lollipops.
Fonterra Greater China chief executive Teh-han Chow said there was great potential in combining the co-op’s dairy products with the rich flavours of Chinese beverages.
The centre provided a new platform to explore the use of dairy products in beverages, and provide innovative solutions to meet the needs of Chinese consumers, he said.
“But the new application centre is also an important part of the co-op’s global R&D system.
“Part of the success of our foodservice business in China has been driven by the application centres which allow us to better support our customers, and better understand Chinese consumer preferences.”
The application centres boosted the co-op’s ability to pick up on the latest trends in the food and beverage sector, he said.
“Consumer preferences in China are constantly changing, and health awareness has grown since Covid-19 which has increased dairy consumption.
“The government is also pushing for people to aim for a daily dairy intake of 300 to 500 grams.”
A total of 1434 new kinds of non-alcoholic beverages were launched by key tea and beverage brands in China last year.
Shenzhen was the perfect location for the new centre, as many of the country’s leading beverage customers were headquartered there, Chow said.
“New ideas flourish in Shenzhen due to the city’s young population and innovative environment.”
The new centre was Fonterra’s second facility in the Pearl River Delta region, which was home to about 86 million people and represented 12% of the country’s GDP.
The other facility was in the city of Guangzhou, which was a short distance from Shenzhen, but it was focused on bakery applications.
Many of China’s leading beverage customers are headquartered in Shenzhen.
Fonterra also recently completed digital upgrades of its two other application centres, which were in Beijing and Shanghai.
All four of the existing centres had beverage application capacity, and while the Shenzhen application centre would focus on beverage applications, it had bakery capacity.
Fonterra’s foodservice business, which supplied bakeries, tea houses, coffee shops, restaurants, convenience store chains and supermarkets with specialist dairy products, was started in 2013.
It was a global market, and the co-op was competing with international rivals like Nestle and Danone, but it planned to grow its presence across Greater China, Southeast Asia and the United States by 2030.
Earlier this year, Fonterra announced a boosted first-half profit of 50% and plans to return $800 million to shareholders from asset sales.
Under chief executive Miles Hurrell’s leadership, the co-op has been selling overseas assets after a period of global expansion failed to deliver the promised profits and left it saddled with too much debt.
But last year it opted not to sell a stake in its Australian business, as it decided it was in the co-op’s best strategic interests to maintain full ownership.
