Fonterra and Alibaba's Hema Fresh launch dairy range in China

Global dairy supplier Fonterra and Alibaba’s Hema Fresh have partnered up to deliver the Daily Fresh milk range in China.

Emerging in early 2016, Hema Fresh is Alibaba’s new retail concept which combines traditional bricks-and-mortar stores and innovative digital practices to create a modern shopping experience.

The dairy products sourced from Fonterra’s farm hub in Hebei province are now available in 750 mL bottles throughout Hema’s 14 stores in Shanghai and Suzhou. Freshness is a particularly important concept; not only is stock replaced daily, but the freshness is emphasised through the different product labels for each day of the week.

“Shoppers here in China are becoming increasingly sophisticated in terms of their tastes and preferences, which are being driven by rising household incomes,” said Fonterra Greater China President Christina Zhu. “More than ever before, consumers are consciously seeking products that are fresh, nutritious and safe, and our new product for Hema caters to this.”

According to Zu, there is a ‘premiumisation’ of China’s consumer categories driven by the demand for high-quality fresh products, which will only be reinforced by the predicted rise in wages.

Figures from McKinsey suggest that by 2022, over 75% of China’s urban consumers will have an annual income of RMB 60,000 to 229,000 each year (AU$12,000 to $45,000). Compared to 2000, this is a 4% increase, which would explain the stronger purchasing power in the region.

Hema has also been gaining popularity as the ‘new retail’ trend which uses technology and data to seamlessly blend the online and offline shopping experience. Customers have the option of either browsing the store in person and using their mobile phones to scan and purchase items, or ordering online and having the products delivered to their home within 30 minutes, provided they live within a three-kilometre radius.

The company then collects and analyses data in order to provide a personalised customer experience, such as suggesting similar items users might be interested in.

Hema Fresh CEO and Founder Hou Yi explained the benefits of the two companies cooperating.

“This cooperation between two powerful companies is set to redefine the concept of fresh milk in the new retail era,” said Hou. “As a global leader in the dairy industry, Fonterra is well known for quality milk pools, world-class breeding techniques and advanced experience in food safety and quality, which matches well with what we advocate.”

Zhu agreed, stating: “This milestone with Hema is a sign of things to come and indicates that our push to shift more of our local milk into higher-yielding consumer and foodservice products is well and truly underway.”

Image credit: Fonterra.