March 29, 2012

Fonterra's "Refresh" plans target volume, value, velocity

Press release

Fonterra Co-operative Limited outlined details of its group strategy "Refresh", targeted at growing volumes and value at speed, by focusing more tightly on emerging markets and products that meet growing consumer demand for dairy nutrition.

Fonterra Chief Executive Theo Spierings says "Strong economic and population growth in emerging markets is driving a situation where global demand for milk is forecast to grow by more than 100 billion litres by 2020, with New Zealand expected to contribute only 5 billion litres of additional supply by that date."

Spierings adds that while New Zealand milk would always be the priority for Fonterra, it would continue to focus on the fast growing markets in China, ASEAN and Latin America, Middle East and Africa.

On the home front, it will continue to optimise the New Zealand milk business to drive cash and improve return on capital.

With its know-how to produce safe, high-quality and relatively low cost milk, Fonterra will build integrated milk pools outside of New Zealand, in Australia and Latin America, through partnerships and supply agreements.

Fonterra would also continue to move higher up the value chain, growing volumes of higher value consumer branded and out-of-home nutrition, particularly in emerging economies such as China and ASEAN.

On the branded consumer side, Fonterra will continue to extend its Anmumâ„¢ maternal nutrition brand and support the recent strong growth of its Anleneâ„¢ bone health brand.

On the whole, Fonterra will focus its innovation on three priorities - mother and child nutrition, healthy ageing and out-of-home nutrition.  The innovation effort would continue to develop science-led ingredients and products for both customers and Fonterra's own brands.

"Refresh" strategy underlined the need to introduce Fonterra's new farmer-only share trading market - Trading Among Farmers. "We simply can't deliver on this strategy unless we have access to secure, permanent capital," Spierings says.

Fonterra Chairman Sir Henry van der Heyden said the strategy "Refresh" was timely as the Co-op embarks on its second decade of operations.