Amidst the dairy fallout driven by the Fonterra milk contamination scare, the Westland dairy co-operative has come up trumps for the industry in the New Zealand International Business Awards 2013.
Westland has been named a finalist in the ANZ Best Business with revenue more than $50 million category.
The more than $50m category attracts the biggest and best of NZ exporters. Westland was proud to be putting a West Coast organisation on the map, Westland chief executive Rod Quin said.
With a budgeted turnover of over $700m, Westland is NZ’s second biggest dairy co-operative and third largest exporter of dairy products.
The company processes in excess of 750 million litres of milk annually. Its products include nutritional products specialising in infant formula base powders, a range of general milk powders, proteins and butter. It exports more than 85% of its products to 40 countries worldwide.
“Making the finals is recognition of Westland’s commitment to growth, innovation, quality, customer service and our recent move into added-value nutritional products,” Quin said.
“We’ve enjoyed strong growth in the last four years. Revenue has increased by 53% (from $364m to $534m).”
"Important lessons will be learned and the net result will probably be a further strengthening of the already very high health and safety assurance processes in the New Zealand dairy industry.”It is the company’s move to high-value specialised nutritional products that Quin believes is an increasing component of Westland’s success and growth in export earnings."
“Our board made a strategic decision to ease the company away from relying on the volatile international bulk ingredients market. Our important area of focus is on nutritional products where prices are most stable, value is higher and our size, flexibility and customer relationship management gives us a marketing advantage.”
That strategic move was already starting to pay off and while Westland will always have a proportion of its exports as bulk ingredients, it will be a shrinking proportion while the export of nutritional products, such as infant formula, expands, Quin said.
Another factor is its strategy of working directly with end customers and understanding their needs. The Westland team develops specific products with its customers for their identified target consumers, often sharing in the creation of innovative new technology and products.
“One of the best outcomes of making the awards is the insight it gives into our own business. The judging process was a thought-provoking critical analysis we can use to measure and adjust our strategies.”
Meantime Westland was quick to confirm last week that its infant formula base products had tested clear of clostridium and the company had experienced no disruption to its export orders.
Westland continued to load out orders to China and other overseas customers.
Quin confirmed that no extra requirements for tests had been requested by the Ministry for Primary Industries (MPI) although Westland was aware that information could change.
A few Westland customers had requested test results or quality reassurances related to clostridium, which the company had been able to provide.
Westland did not buy or use any of the whey protein concentrate from Fonterra that tested positive for clostridium bacteria.
“We are pleased to have received from MPI confirmation that Westland is not impacted by bans placed on some Fonterra products by some countries. We have been able to continue to export as usual. We do not expect any long term impact on our business or our relationships with customers.”
Quin acknowledged that some additional testing might be required by some markets and that the issues raised by the clostridium scare would take some time to settle, creating some short term uncertainty.
“But in the process important lessons will be learned and the net result will probably be a further strengthening of the already very high health and safety assurance processes in the New Zealand dairy industry.”
Synlait Milk also reassured its customers that all Synlait-manufactured products were safe.
Synlait had not used any of the whey protein concentrate WPC80 recalled by Fonterra in the manufacture of its nutritional powder products such as infant formula.
Food safety and product quality were of paramount importance to the company and it supported the precautionary approach being taken by the MPI and the wider industry, Synlait Milk managing director John Penno said.
“We expect that this incident will result in some short term disruption to trade and some additional testing requirements for some markets but we do not expect this event to impact the growth of our infant formula business beyond the immediate disruptions,” Penno said.
John Penno: Discerning market.
In his address to the NZ Institute of Primary Industry Management conference at Lincoln last week Penno told rural professionals how China was very big and very exciting for the dairy industry.
“It’s a big market but the problem is it’s a discerning market. The internet has changed the way in which we do business. People are watching us so carefully we have to get it right.”
China was influencing the global scene and driving demand into global agricultural commodities to a level not ever seen before. Volatility was becoming enormous.
“The prices up where they are, are driving the next crash. This is the worst possible time for peak pricing. Get used to volatility, it’s there, it’s going to stay there and it’s difficult to work in.”
NZ was crazy about brands but Penno pushed them aside.
Synlait’s Lead with Pride programme based on best performance right across the board was the Canterbury-based milk processor’s focus for the future.
“I am not interested in brands. It’s about best practices and farmers adopting these best practices. My parting shot is all this happens through partnerships you can’t do anything without in this day and age.”
Customers were not buying on price.
“I want people who differentiate on quality and buy on quality. Customers will pay big premiums if they can trace what they buy.”
It all came back to business models and industry experts had a big part to play.
“The way of the past did not do it anymore,” Penno said.
While work on the Yili owned Oceania Dairy’s new processing plant at Glenavy in South Canterbury was progressing to plan, the company declined to comment on the Fonterra botulism scare.
One of China’s largest dairy processors, Inner Mongolia Yili Industrial Group started construction of its $214m infant formula milk processing plant in May, with the plant scheduled for completion in June 2014.
Preliminary co-operation agreements with some local farmers and interest from potential suppliers through conversions were falling into place as the company also focused on staff recruitment, Oceania Dairy chief executive Aidan Johnstone said.
Oceania has indicated its intention to access Fonterra’s regulated supply of raw milk but Yili had no comment on Fonterra’s or the wider industry’s issues of the past week.
“Yili do not wish to comment,” Johnstone confirmed.