Fonterra Expands Southeast Asia Foodservice Amid Rising Dairy Demand

Fonterra, the New Zealand-based dairy cooperative, is intensifying its efforts in the Southeast Asian market, aiming to capitalize on the growing dairy demand in the region. The company's foodservice division, operating under the Anchor Food Professionals brand, has become one of its core businesses, contributing 24% of its earnings last year.

The cooperative reported that milk solids shipped through its foodservice channel increased from 74 million kgMS in 2022 to 100 million kgMS in the first half of the current financial year. This growth is reflected in a 7% increase in foodservice revenue, reaching $2.6 billion, with earnings before interest and tax amounting to $198 million.

Leading the expansion in the region is Daniel Hitz, Fonterra's newly appointed director of Southeast Asia foodservice. The company is aiming for its foodservice to represent 16% of total milk solids by 2027, adopting a consolidated regional strategy to improve logistics and operational efficiency.

Fonterra sees Southeast Asia as having a growth potential comparable to China's dairy market expansion. However, the region's cultural diversity and varying consumer preferences necessitate a tailored approach. Dairy products in Southeast Asia are increasingly associated with health benefits and rising living standards, presenting opportunities for premium New Zealand grass-fed products like Anchor and Westgold butter.

Despite these opportunities, Fonterra faces competition from global dairy companies such as Lactalis, Saputo, Dairy Farmers of America, and Bega Group, which are also expanding in Southeast Asia. Industry analysts have noted ongoing margin pressures and rising costs faced by dairy processors worldwide as they adapt to evolving consumer demands and a competitive market landscape.