Fonterra to open new application centre in Wuhan, China

As two sites at the heart of Fonterra’s Foodservice business celebrate their tenth anniversaries, the co-operative will open its sixth application centre to meet growing demand. In 2014, Fonterra opened its Waitoa UHT manufacturing site in the Waikato, which specialises in producing high-value cream products for Fonterra’s foodservice customers.

In the same year, Fonterra opened its first-ever application centre in Shanghai, with the centres playing an important role in the co-op’s foodservice business by enabling Fonterra to partner with local customers and develop product applications designed to meet local consumer tastes and trends.

Fonterra will open its sixth application centre in China later this year, located in Wuhan, with construction now underway. This application centre will add to those in Beijing, Chengdu, Guangzhou, Shanghai and Shenzhen.

CEO Miles Hurrell says Fonterra’s Greater China Foodservice business is a key part of the co-op’s value-add strategy, using the cream products produced at Waitoa UHT.

“The formula for our foodservice whipping cream was developed by our team at Fonterra’s research and development centre in Palmerston North and is an example of how we use innovation to add value to farmers’ milk.

“This product alone is used in approximately 400 million beverages and 260 million cakes in Chinese bakery stores each year and we’ve seen a continued increase in demand since 2014.

“Our application centres play a pivotal role in driving innovation and tailoring Fonterra’sfoodservice offerings to the tastes, culture and trends of the area in which they’re located. They include different spaces and equipment to enable technical experts and experienced chefs to test and develop new products, often in collaboration with customers.

“The addition of a new application centre in China signals the continued growth we expect to see from our Greater China foodservice business, and this will likely lead to further growth in demand for our foodservice cream products, which we are set up to cater for,” says Hurrell.

In FY23, Fonterra’s Greater China Foodservice business reported NZ$2.2 billion in revenue with gross margins of 17.9%.

Fonterra’s CEO of Greater China Teh-han Chow says the high-quality product coupled with the local expertise the application centres provide gives Fonterra a competitive edge in China.

“While we already have a strong Foodservice business in China, we’re looking to continue to grow. By working closely with customers to create product applications that help their businesses to thrive, we can all benefit from the opportunities the China market presents.”

Fonterra’s foodservice business is also growing in Southeast Asia, particularly in the bakery channel, with the emergence of specialty bakery and lifestyle cafes across the region. Like China, in-market chefs assist the team in developing new local applications based on consumer needs.

Fonterra’s foodservice business sells to businesses that cater for out of home consumption (bakeries, cafes and global quick service restaurant chains). It partners with foodservice customers to test and develop products for their kitchens, using its network of Fonterra application centres (FACs) and professional chefs.

Fonterra considers the needs of each customer and market and work to their needs. There is a strong connection between category, markets, FRDC, technical excellence and operations, that all link together to deliver dairy products, the company says.

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