Fonterra bullish on PHL market
NEW ZEALAND-BASED Fonterra is sticking to its bread and butter in the face of rapidly changing preferences, as a surging economy gives rise to consumers who are now eating out more and giving more focus on health and nutrition.
A country that almost entirely relies on dairy imports, the Philippines is an important area for investment and growth for Fonterra, the company behind the brands Anchor, Anmum and Anlene that accounts for 22% of all dairy products traded globally.
“The country is expanding. All the cities have good, strong ( gross domestic product) so you can expect if the people have good incomes and the need for quality products and the role of dairy nutrition becomes greater, then the outlook becomes positive,” Mike Boness, general manager of Fonterra Brands Philippines, said in an interview.
Fonterra is in a position to capitalize on this, with the Philippines sourcing about 30% of its dairy from the company, Mr. Boness said, citing the 2016 data. Last year, Filipinos enjoyed 426 million glasses of milk across Fonterra brands, equivalent to the consumption of more than 1.1 million glasses everyday.
The economy shif ting to high gear has increased household income, fueling food consumption and dramatic changes in behavior and dietary patterns.
Fonterra is using what it does best, combining its grassfed farming heritage and innovation to adapt to the customers’ rapidly evolving demands.
“People want variety and choice and if you look at other markets as well, (consumption) is increasing. It just means we have to keep up with our innovation to meet those needs. People want more choice. ( They are) more healthy and conscious of what they are consuming. It will probably get complex from here,” Mr. Boness said.
Close to four decades of operations in the Philippines has allowed Fonterra to plant its feet firmly in the market. Anchor and Anmum Materna are the number one brands in the butter and maternal milk categories, respectively, while Anlene is one of the top brands in the adult milk category.
This year, Fonterra aims to further strengthen its presence in the market with the launch of Anchor Processed Cheddar Cheese and Anlene Movemax White Coffee.
More restaurant visits and Filipinos adopting an on-the-go lifestyle also bode well for Anchor Food Professionals, the food service segment of Fonterra that works with businesses to create new high function, fit-for purpose dairy ingredients and service solutions.
Fonterra products are now at the heart of some 6,000 food and beverage establishments ranging from quick service restaurants and convenience stores to bakeries and cafes, as Anchor Food Professionals help grow their business by improve their productivity, increasing yield, reducing wastage, enhancing taste and delivering exciting new menu options.
“Customers are constantly looking for new things because times are changing. What Filipinos were consuming 30-40 years ago is way different than what they are consuming now,” Mr. Boness said.
The food service business is now growing as fast as the consumer branded segment, providing two strong pillars of growth for Fonterra.
With a large chunk of its business is in Manila, the government’s drive to spread wealth to the countryside presents significant opportunities for expansion for Fonterra. The roll out of new retail channels outside the Philippine capital allows them to further expand their presence in the provinces.
Fonterra believes it can sustain its double-digit growth in the country, or even grow faster, as it is in a position to take advantage of increasing prosperity that will further drive dairy consumption, Mr. Boness said.
“The trends that were small a couple of years ago are getting bigger. As soon as the trends became bigger, consumption will grow with it. I expect the future growth will be bigger,” he said.