Fonterra's investment in foodservice pays off

The foodservice industry is growing rapidly, with consumers increasingly going out for dinner or ordering coffees. Anchor Food Professionals, Fonterra’s foodservice business, has capitalised on this trend leading it to be named New Zealand’s sixth biggest export business.

Generating over $2 billion in annual revenue over the past year, the company has catered towards consumers’ changing lifestyles.

“In the USA, more than 50% of all spend on food and beverage is now out of home and in China the market has grown by 30% over the last five years. As a result, the global industry is predicted to be worth US$3 trillion in 2021,” said Fonterra Chief Operating Officer Consumer and Foodservice Lukas Paravacini. “We have taken advantage of this eating out trend and currently Anchor Food Professionals is growing around 10 times faster than the global total foodservice market.

“It is part of our strategy of focusing on adding more value to every drop of our farmers’ milk. The gross margin from foodservice is two or three times what we can earn from basic ingredient products.”

A huge driver of their success is focusing their business model on solutions based on customer insights, according to Grant Watson, Global Director Foodservice.

“We have 56 chefs in more than 50 countries who go into kitchens to demonstrate the products. They get to know their customers, work to understand their issues and challenges, and help us design more new products to help address those problems,” Watson explained.

By understanding what the pain points are, they are more equipped to solve these issues. Anchor Food Professionals aims to create long-lasting and robust products for a range of popular cuisines across the world.

“We also have a very clear channel-led system,” Watson said. “This provides foodservice kitchens around the world with ingredients for some of the largest categories in the business: Asian-style bakeries, Italian Kitchens and Quick Service Restaurants. Our ingredients include our extra stretch mozzarella, UHT culinary and whipping creams, laminated butter sheets and cream cheese.”

Over the past four years, $700 million of the $850 million Fonterra has invested in new production capacity for Foodservice has been in New Zealand. Paravacini said these developments took place in Waitoa in the Waikato for UHT creams; Eltham in Taranaki for slice-on-slice cheese; Clandeboye in Canterbury for extra stretch mozzarella; and Te Rapa in the Waikato and Darfield in Canterbury for cream cheese.

Paravacini implied the investments were made in order to address rising consumer demands and to ensure they meet their annual revenue target of $5 billion by 2023.