Fonterra in China – Theo Spierings talks megatrends

By Steve Hart

Speaking at the inaugural China Business Summit, Theo Spierings, CEO of Fonterra – the world’s biggest dairy exporter – said a number of “megatrends” are starting to emerge in China.

Global household incomes are forecast to rise by 50% between now and 2015; 350 million more people will live in cities; 50,000 new skyscrapers will be built, housing the population of 10 New York cities; andn demand for dairy will double every five years.

Spierings predicts more than 485 million people will be using the internet and e-commerce will triple by 2015, making China the largest retail market in the world. He questioned if there will be enough food for the global population  (“Can we feed them safely and how much of that food can be produced in New Zealand?”)

Spierings says New Zealand needs to grow beyond its current consumer positioning. He noted Shanghai is the key innovation centre for food in China, and that New Zealand needs to “develop leading positions in pediatric and material nutrition”. Fonterra plans to “selectively” invest in milk pools to the tune of one billion litters by 2018. “We need to align our business and organization to enable that strategy,” he said.

Fonterra in China

Spierings says 17% of milk product exports are going to China, the firm is supplying 12 cities there – some of the largest food businesses operating in the country. He hopes to see “significant” growth “in and out-of-home dining in China”.

The firm’s Anlene brand of calcium products is a market leader in Hong Kong,
Shanghai and Guangzhou.

The firm has built an integrated milk business in China, featuring two dairy farms that have been completed with a third on the way. “Additional farms will be developed with financial partners,” he says.

Spierings says his firm’s key principles are:

  • Commitment to the future world’s number one economy;
  • Align strategy with Chinese government priorities;
  • Partner with local firms there;
  • Ensure management control.

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