Kimi Guillermo

Describe the different strategies Fonterra has used to market dairy products in Asia.
Evaluate the success of their strategies.

Fonterra is a New Zealand company, and one of its biggest ones. It is a multi-national
enterprise, operating in approximately 140 countries. Known as the sixth largest dairy
company in the world from 2022, and the largest known dairy producing brand located in the
southern hemisphere. One of its largest thriving markets is the Asian market, with a growing
demand for their products such as cheese, milk, and butter. Fonterra sees the Asian market
with great potential for business, and very strategically navigated its way through with a
series of different strategies that has made them successful in the Asian market. Some of
these strategies include the establishment of local production facilities, diversity of their
products, partnerships, marketing, and branding and more. This essay will delve into those
strategies.
One of the strategies that they used to be successful is their establishment of production
facilities. By doing this, it allows them to produce locally, leading to reduced transportation
and shipping costs, and they are also intimately involved in the local market, which improves
their understanding, leading to more beneficial success as market intimacy is developed. This
is because they can tailor their products that best suits and adapts to the local needs of the
market. Some examples of countries that they have established local production facilities is
Malaysia, China, and Singapore, but not to mention more. This strategy is successful as this
allows them to be more efficient, save costs and it ultimately grants them the ability to tailor
their products to the specific needs and preferences of their local customers. This leads to
them staying competitive in the Asian market regarding dairy.
Another strategy that Fonterra took on to be successful is the diversification of their products.
They took on the liberty to diversify their products in the Asia market, they have gone beyond
their traditional products of milk and milk powder. They have included other ingredients such
as butter, cheese, and other ingredients. They have also expanded their products by
establishing different brands. Among the most popular of brands are brands such as Anchor,
Primo, Mainland, and Kapiti just to name a few. These brands are running from trusted
processes and using only the highest quality natural dairy. According to Fonterra, Ms Chow
(Chief Operating Officer Global Consumer and Foodservice) states that it is an exciting time
for Fonterra to look at a leading role in how the world sources dairy products. They are
tailoring as well as working with their consumers very closely to make sure they can deliver
the products, says Ms Chow (Fonterra, 2016). By doing this, they are allowing themselves to
be able to allocate the needs of the Asian market, to capture a much wider scope of the
market and the share. The diversification of their products allowed them to penetrate the
market and increase their sales growth by allowing them to fulfil the needs of different
market segments, increasing and giving them the edge on their competition and more increase
their income potential.
Partnerships is another aspect that Fonterra took on to make sure of their growth and success
in the Asian market. Strategic partnerships are vital and crucial to Fonterra’s marketing, it
allows them to collaborate with companies which then gives them access to more networks
and market views. Fonterra gains leverage against other competitors by doing this and
forming these partnerships. An example of one of these huge partnerships with Fonterra is
their partnership with Lazada. A significant example of a partnership with Fonterra is with the
Kimi Guillermo

Philippine company Lazada in 2018. Lazada is an international e-commerce company and

operator in Southeast Asia. Lazada operates in six countries: Malaysia, Philippines,
Singapore, Indonesia, Vietnam, and Thailand. This partnership allowed Fonterra to bring their
dairy products to online consumers in Southeast Asia for the first time – serving
approximately 560 million consumers (Cornall, 2018). Another major aspect of what makes
Fonterra so successful in the Asian market is their security and their assurance of quality
products, especially as they are in the food industry. Fonterra has made sure to highlight their
quality assurance. An example of this is their partnership with Microsoft. They target food
safety and quality boost with a cloud-based strategy, not only will it do this, but it also helps
Fonterra with the management of the large amounts of data that they possess (Neo, 2020). In
the words of Fonterra Chief Information Officer Piers Shore, “Food safety and quality is a
critical priority for Fonterra. As we move more workloads into the Cloud, including the
applications supporting traceability, it becomes more cost effective and easier to scale up
when required”. Another specific example of a partnership that makes Fonterra successful in
the Asian market and beat out other competition is their partnership with Xiamen C&D Co.
Ltd. C&D helped Fonterra in achieving safe and efficient product deliveries in the Asian
market (C&D, 2020). C&D has played a big role alongside Fonterra to keep the quality of
their products very high. The product circulation is strictly looked after and ensured to be of
highest possible quality. They also assist Fonterra in selling their products to more people
online and physically, as stated by Ms. Zhu (President of Fonterra Greater China).
Research and Development is another aspect that plays a large role in their success as a
multinational company in the Asian market. With this they can develop their products to
further match the specific needs of the Asian market. With their R&D, they can tailor
ingredients that match the Asian market needs. They are also able to provide as their research
allows them so, an example of this is their demographic research. Asian markets are growing
at a much more rapid pace compared to some developed markets such as in the US and
Europe, apparently, there is a strong correlation between the GDP (Gross Domestic Product)
and the dairy consumption therefore meaning that as a person grows wealthier, their wants for
dairy products increase (Chow, 2018). Chow (2018) describes the Asian markets now being
the “take-off zone” and “hot zone” because of the fast growth in dairy demand. Fonterra’s
research and development of products allow them to be successful in the Asian market as the
Asian market is very rapid in growth in dairy demand.
Having sustainable practices as a company is crucial for success, and Fonterra has adapted
this. They know how important it is to be sustainable, and they’ve grown notable because of
it, especially in the Asian market. They have integrated sustainability into their strategies
venturing further into their growth in the Asian markets. They are very committed to reducing
their environmental footprint, which then stands out to consumers who are very aware and
sentient about the footprints environmentally. This then makes the consumers buy from
Fonterra even more as they stand out. According to the Fonterra CEO Asia Pacific Judith
Swales, “It is all about the importance of how we look after our environment, how we look
after our people, and how we look after our animals” (Neo, 2020). An example of how
they’ve done this is through their packaging. Packaging and their waste management is one
of the firm’s major strongest points (Neo, 2020). Fonterra themselves also added, “We will
continue to reduce the quantities of materials used, minimise waste across our full value
chain, reduce solid waste sent to landfill from all operational sites and transition our finished
Kimi Guillermo

goods into packaging that is more readily recyclable. Additionally, M. Ali Nasution
(Operations Director of Fonterra Brands Indonesia) states “Sustainability is at the very heart
of Fonterra’s long-term strategy – its fundamental to the way we operate, and we’re
committed to more sustainable food production activities globally”. This ultimately allows
them to standout to consumers in the Asian market as Fonterra makes the effort to be
sustainable in the long run.
Fonterra, one of the largest dairy companies in the world, implemented strategies that make
them successful. These strategies are what allows them to be adaptive and attentive to the
Asian market by delivering them their needs, especially that the Asian market is now growing
at a rapid pace. Their partnerships with companies with the likes of Lazada and Xiamen C&D
Co. Ltd allow them to reach a wider market scope, to be able to sell their products to a wider
amount of people and in return gain more revenue. Fonterra also catches the public’s eye with
their ability to be adaptive and sustainable, by modifying the way that they package their
products to be more sustainable and recyclable ready, they are capturing the consumers who
are more sentient of the problems of sustainability regarding companies. Fonterra’s ability to
expand to different locations, adapt and partner with other firms make them a very well
sought out company and makes them up to be very strong competition against other dairy
firms in the Asian market, as they are able to take advantage of the large scale of dairy
products that they produce that meet the growing Asian market’s demands.
Kimi Guillermo

References:

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https://www.chinacnd.com/en/video-32.html

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partners-with-online-company-Lazada

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bring-dairy-goodness-online.html

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%20products%20to%20stay%20front%2Dfooted%20on%20consumer%20trends

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earns-Green-Industry-Award-for-its-sustainable-operations.html

- foodnavigator-asia.com. (n.d.). Digital dairy data: Fonterra targets food safety and

quality boost with cloud-based strategy. Foodnavigator-Asia.com.

https://www.foodnavigator-asia.com/Article/2020/09/15/Digital-dairy-data-Fonterra-

targets-food-safety-and-quality-boost-with-cloud-based-strategy

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five-year plan with focus on packaging and health. Foodnavigator-Asia.com.

https://www.foodnavigator-asia.com/Article/2020/01/29/Sustainability-for-success-

Fonterra-report-highlights-five-year-plan-with-focus-on-packaging-and-health
Kimi Guillermo

- Golden future beckons for dairy in Asia. (n.d.). Fonterra.

https://www.fonterra.com/nz/en/our-stories/articles/golden-future-beckons-for-dairy-

in-asia.html

- Stringer, C., Tamásy, C., Le Heron, R., & Gray, S. (2016). Growing a global

resource-based company from New Zealand: The case of dairy giant Fonterra.

In Agri-food commodity chains and globalising networks (pp. 203-214). Routledge.