Fonterra to build factories in China?
Fonterra is sizing up the possibility of building processing plants in China to create products from its China farms.
Greater China president Christina Zhu said the dairy giant used third party plants to process milk from 28,000 cows it had at two hubs near China’s capital, Beijing. A third hub is being built.
‘‘We have farms, we have a big downstream business and we need a manufacturing capability. Right now, it’s done through a small number of carefully audited third-party sites and we have Fonterra people working on these sites fulltime to make sure the products are safe,’’ she said.
‘‘There is a natural cap to how much you can do through third parties so we’re assessing all the options, but we’re not in a position to say a definite timeline or make a commitment at this point.’’
Zhu said if the plants were built, there would be a portfolio of products, including fresh milk and fresh yoghurt. The Chinese farms already supply fresh milk to the Hema stores, run by internet shopping giant Alibaba.
Five years after launching on the Chinese market, the Anchor brand was now the top-selling one in both stores and through e-commerce. In that time, Fonterra’s business in China had jumped from $1 billion to $5b in turnover.
Fonterra is a major player in the China market: It makes up 11 per cent of the country’s total dairy consumption, accounts for
36 per cent of dairy imports and
26 per cent of the dairy giant’s output goes into China.
It now has Anchor products in
13,000 stores, and has gone from offering one product to 47. About
55 per cent of products are sold through e-commerce platforms, compared with 45 per cent in stores.