The New Zealand-based dairy ingredients giant initiated its ‘organics strategy’ in July 2011 and has since noted that this arm of its business is being driven by strong demand from Asian markets, but no sales statistics were made available as it was, "too early to release them".
Craig Deadman, global marketing manager for Organics at Fonterra, said that Fonterra’s organics range “naturally lends itself to Asia” as it is a regional market predominantly tainted with food safety concerns.
There is an increasing demand for clean, natural products, Deadman told FoodNavigator-Asia, and so organic foods have been welcomed in most Asian markets, particularly in China.
“The resonating area of value for consumers is that our ingredients are organic, certified and from New Zealand,” he said.
Valued and trusted
Purity, certification and confidence are marked high in what Asian consumers value in dairy products, he added, and this puts the company into a strong space.
The organic certification come from the New Zealand Food Safety Authority, he said, which has equivalency with EU organic standards and is recognised by the US Department of Agriculture - two bodies that last week formally announced they merging their standards.
This holds great value for Asian consumers, he said, “but it’s more than just organics. It is the reputation of New Zealand; known for its purity,” that is also an important factor driving demand for Fonterra’s organic ingredients.
The Fonterra brand is also well-known and it is a cooperative, which is highly recognised for organic ingredients as they are recognised for sustainability, “organic dairy from New Zealand stands well globally.”
He added that there is an increasing trend for Asian suppliers wanting to re-pack consumer products in New Zealand as well, to enable a ‘produced and packaged’ in the country claim.
Asia, organically growing
Organics has gained traction in China and Southeast Asia in particular, Deadman said, but Korea, Malaysia, Hong Kong, Taiwan and Singapore are also huge markets for our customers.
“Fonterra’s ingredients customers are seeing growth in these markets and we are supporting this growth,” he said.
He added however, that the company is not exclusively targeting or solely focused on Asia.
“It takes a lot of hard work, it is not an easy region to break into,” he noted.
Fonterra has regional offices in China, Singapore and Australia which enables the global company to have a ‘local touch’, he said.
“This is an advantage as we have people on the ground, who understand organics… and they are able to reinforce key messages in regional languages,” he said.
In most cases we are supplying our organic ingredients to companies working with Asia, rather than Asian-based companies.
“We are predominantly an ingredients business, and so we are just focused on what we do well,” he said.
Fonterra is committed to the organics segment long-term, Deadman said, and “our strategy is to support all our existing customers in going forward.”