Fonterra China brought 16 of its largest ingredients resellers to New Zealand last month for dairy industry familiarisation and marketing conversations.
The co-op has 37 authorised resellers in China, who collectively account for about one-third of ingredients purchasing volumes, extending the reach of its own sales team.
The NZ visit had been delayed and was the first of its kind since 2013. It included farms, processing plants and Fonterra’s head office.
“We have 17 direct sellers employed in China, plus the 37 resellers and all the people who work for them,” Casey Thomas, vice-president, NZMP Greater China, said.
“It allows us to reach a lot more geographies and speak to medium to smaller-sized customers.
“Resellers also participate strongly in Global Dairy Trade auctions for their purchasing.
“One fellow here in NZ on this trip has bought whole milk powder at 343 GDT events out of the 344 held.”
Thomas said that resellers in China make up 30% of all GDT sales of ingredients, under-pinning the prices for reference products and the farmgate milk price.
The traders, mostly in private enterprise, may have started small, importing just one container of products.
“All of those in NZ at present have traded at least 6000 tonnes in the past 12 months.
“We share with them our marketing messages and they rely on NZMP origin and the freshness of our products.”
Dairy product traders in China aspire to be authorised NZMP resellers, Thomas said.
In most instances they are trading back to back with Chinese end-users along with some speculation on where the market is headed.
“Even some of our largest customers, who buy 80-90% of their needs direct from us, also use some resellers because they offer flexible stock-in-hand to manage volume demands.”
“Most of their customers are medium to smaller dairy companies who recombine ingredients for yoghurts, liquid milks, bakery items and all kinds of retail products.
“Fonterra is the source for most of their milk powders, milkfat products and cheese, but they may also buy other smaller volume products direct from other countries and companies.”
Three years ago total annual imports of whole milk powder into China were 900,000t. That has fallen to 500,000t as domestically produced powders have grown.
“We have looked at this domestic product and it is not up to NZMP quality for gas-flushed and heat stability.”
In September China accounted for only 30% of GDT sales but now confidence is stabilising and China’s share is closer to 50%.
Cheese, caseinates and probiotics are all growing strongly, Thomas said.