April 28, 2016

A new Global Dairy Trade (GDT) e-commerce sales channel has been launched that will enable Fonterra to allow customers to buy dairy ingredients online 24/7.

The new GDT Marketplace provides an additional sales channel for NZMP Ingredients and meets growing demand in the dairy market for online business-to-business transactions, Kevin Wickham, Fonterra's managing director for global ingredients, said.

The service and other developments were complementary to GDT's current offerings.

"E-commerce is increasingly seen as convenient and open for business whenever customers want to make purchases. Dairy is no exception," Wickham added. "Online trading is ideal for customers purchasing smaller volumes who want convenience and availability at a time that suits them.  We see this as an opportunity to grow our sales both with existing customers and as an ideal way to reach new customers over time."

Fonterra will initially look to offer a small range of ingredients on GDT Marketplace from the start of the 2016/17 season, and add further offerings as customer demand builds. These offers will exclude product specifications already sold on GDT Events. 

"Direct transactions with customers account for the majority of Fonterra's sales and this will continue. Many of our major customers look to us to combine both ingredients and services which create value for them and for us. This is best achieved through our global network and the relationships our people build with our customers," Wickham explained.

He said Fonterra welcomed the introduction of a cream grouping in the twice-monthly GDT Events from June. Cream is used to manufacture either butter or anhydrous milk fat (butter with the water removed).

Grouping the cream will deepen liquidity and reduce volatility in butter and anhydrous milk fat (AMF) prices.  The enhanced software implemented by Global Dairy Trade enables the source cream to be grouped and availability of either butter or AMF to adjust flexibly during a trading event based on bidding demand to better meet customer needs while also improving the value the underlying cream.

"This cream group will allow Fonterra to make the best use of our manufacturing flexibility while letting customers decide how much butter and AMF they want rather than being constrained by available offer volumes for butter and AMF, and running the risk of over or under supply unduly influencing the fair market price on the day," Wickham commented.