Friday, July 1, 2022

Active living unit drives profits for Fonterra

Fonterra’s active living unit in the NZMP division is one of the value-add businesses that will deliver on the company’s long-term strategy of growing operating profit by 40-50% by 2030.

It is growing revenue by 7% annually and on target to deliver the 2030 targets, divisional head Komal Mistry-Mehta said.

Active living margins will increase by $50 million from 2021 financial year to FY24, she said.

Her Singapore-headquartered marketing unit works with functional foods for lifestyle choices, often to counter the modern afflictions like anxiety and stress, tiredness and fatigue, obesity and sleeping troubles.

Mistry-Mehta said the global health and wellness market was valued at US$66 billion and growing at 6% annually.

Medical nutrition is valued at US$50b and growing at 5% a year.

Health and wellness nutrition is rapidly going mainstream, with eight out of 10 consumers looking for functional benefits when snacking.

Dairy is the obvious source for many of the proteins and lipids in these functional foods, she said.

Fonterra already has expertise, including dairy proteins that help maintain muscle mass, lipids to improve mood and probiotics to support immunity, digestion and a developing role in mental wellbeing.

It goes beyond ingredients processing and functionality into consumer propositions based on science-backed nutritional health claims.

“Our portfolio of these bioactives definitely has synergistic benefits so, through R&D, how do we create unique value propositions for our customers,” she said.

The active living division has expanded its geographical reach into China and South Korea, whereas future markets included Vietnam, Indonesia and Thailand.

It deals with medical professionals, supplement brands and health and wellness brands, moving beyond business-to-business into addressing consumers also.

Primary health benefits concern muscle mass and its gradual loss in the elderly, mobility, malnutrition and digestive health.

The developing benefits include oncology perioperative care and mental wellbeing.

The complementary benefits may include immunity, metabolic health and weight management.

Premium proteins are the hero products where Fonterra can be first to market with IP-protected and highly differentiated products.

The United States is the world’s largest active living market, where Fonterra has whey protein plants and does business with Sun Genomics, which provides personalised probiotics to consumers.

Another company is Life Extension, offering a range of vitamins, nutritional substances and blood tests, which launched in 2021 supplements containing Fonterra’s BifidoB HN019 probiotic.

In South Korea the Daesang company recently launched a new bioactive whey for immunity with eleven times the lactoferrin percentage of standard whey protein.

Fonterra produces probiotics in Palmerston North and it is not dependent on the milk supply.

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