Fonterra eyes premium trend in China with new milk, butter

New Zealand dairy giant Fonterra is introducing fresh imported milk and "net zero" butter to China, as company executives see the "premiumization trend" to take hold in the world's largest consumer market.

The Anchor fresh milk featuring New Zealand grass-fed cows, along other new offerings, made its Asia debut during the ongoing fourth China International Import Expo. The product has become available via local upscale retail channels like Freshippo in cities like Shanghai and Hangzhou.

"The CIIE is a testimony to the company's long-term commitment to China and its confidence in the Chinese market," said Teh-han Chow, CEO of Fonterra China. "We hope to use this national event to bring more quality dairy products from New Zealand and stay rooted in this market with unlimited potential."

Prior to this, Fonterra has already been working with Freshippo to offer fresh milk produced by locally bred cows in China. The introduction of imported fresh milk requires pasteurization technologies that ensure longer shelf-life (up to 17 days), and the products are priced at nearly 50 yuan for 1 liter.

"We will keep both options -- imported and locally produced fresh milk -- available to the Chinese market, as we do witness a certain silo of Chinese consumers who aspire to top-notch products and are willing to pay a premium," said Bo Shuangyu, vice-president for consumer business at Fonterra China.

Also debuting at the annual grand fair is a carbon-zero certified organic butter, whose carbon footprint in the entire farming, manufacturing and operations cycle is verified by an independent third-party organization.

"The price for environmentally conscious products might be a little higher than the conventional ones, but based on our initial research, Chinese customers are interested and are willing to give it a go," Chow said.

The company also inked a number of deals with local partners during the expo.