Fonterra’s ingredients revenue hits $17.5B as American companies leverage New Zealand dairy attributes.
New Zealand dairy attributes are increasingly being leveraged to differentiate and promote food products in Fonterra’s key United States ingredients market, with grass-fed milk production and high animal welfare standards serving as powerful marketing tools for American brands. Fonterra executive vice president for global markets ingredients growth Elisa Giusti revealed that while the US has traditionally been an ingredients market for the cooperative, business has grown exponentially over the past three years based on recognition of New Zealand’s premium dairy production systems. American companies are using NZ-sourced dairy as an ingredient across diverse product categories including infant formula, confectionary, cheese, butter, protein supplements for the aged, and nutritional products for ill consumers.
Lucerne Dairy Farms exemplifies this trend by importing New Zealand grass-fed butter through retailer Albertsons to compete against Ireland’s Kerry Gold, the US’s number one butter seller also marketed on grass-fed credentials. Giusti emphasized that Fonterra serves as ingredients supplier rather than brand owner, creating opportunities to position New Zealand dairy on American retail shelves while avoiding the expensive and challenging direct brand-building required in such a complex mature market. This strategic approach enables US companies seeking high-quality ingredients from desirable production systems to enhance their own brand attributes through association with New Zealand dairy’s reputation.
Consumer health consciousness has become increasingly influential in purchasing decisions, with dairy protein now ubiquitous and perceived as health-promoting food by demographics with sufficient disposable income prepared to pay premium prices. The organic milk market is rapidly growing driven by these health-focused consumers who identify dairy as high-quality protein source and New Zealand’s production systems as safe and animal-friendly. Giusti dismisses concerns about dairy ingredients being replaced by alternative plant-based or fermented proteins, arguing that “not all protein is equal” and dairy protein represents one of the highest quality proteins available to consumers.
Fonterra maintains selectivity about ingredient customer relationships, targeting companies offering highest value propositions, value leverage capabilities, and points of differentiation rather than pursuing volume-based strategies. Giusti, whose entire career has been spent in US food sector spanning consumer brands, foodservice, and now ingredients, expressed unprecedented excitement about the past three years due to New Zealand dairy’s positioning and strength in American ingredients markets. The cooperative has been “deliberate and focused on where we see our right to win so we can maximize the return for farmers,” reflecting strategic discipline in market development.
Financial results validate this ingredients-focused strategy, with Fonterra’s ingredients business earning $17.5 billion revenue in the 2025 financial year compared to $14.8 billion previously, returning gross profit of $2.2 billion versus $2 billion in 2024. Giusti believes alternative proteins will prove complementary to rather than replacement for dairy as the world feeds a growing population, positioning New Zealand’s grass-fed dairy production systems for sustained demand growth. The cooperative’s strategic refocusing away from consumer brands toward ingredients and foodservice operations appears vindicated by these financial metrics and market positioning achievements in the world’s most competitive food market.
Source: Farmers Weekly – US reputations are being built on NZ dairy
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