Saturday, December 2, 2023

Coffee and cheese blend for Chinese success

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Fonterra’s food developers go where a new taste for coffee leads.
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A raw cheese latte may not enter the repertoire of many Kiwi baristas, but it is one of multiple products Fonterra is assisting food companies in China to perfect in a market starting to find a taste for coffee.

The food co-operative has just opened its fifth China-based application centre, with the latest focusing specifically upon beverage development.

As with previous centres the Shenzhen facility provides Fonterra with the opportunity to interact with food service companies developing and fine-tuning products that include dairy-based ingredients, and add value to a food company’s offerings.

Justin Dai, Fonterra’s vice-president for food service in greater China, said the beverage sector in China only really started to emerge six years ago with the huge popularity in bubble teas.

“We saw this move from ready-to-drink products to this ‘hand-crafted’ street vendor-style drinks sector, and the beverages channel has become an established channel now for our food service sector.”

Lessons from that product’s growth are now playing into the giant market’s next beverage obsession, coffee drinking. 

Dai said Shanghai has become the city with the most cafes of any city in the world, totalling 7000 after years when Starbucks almost had the market to itself.

“We are seeing signs of replication in the coffee market, with cream and even cream cheese being used in coffees to provide additional taste.  A couple of years ago cream was more of an option, but it is included more often now.”

In October last year Fonterra development staff worked with giant Chinese coffee chain Luckin Coffee, which operates more than 7000 coffee houses across China.

They developed a “raw cheese latte” and the drink bolted out cafe doors, selling 6.59 million cups in only one week. 

Promotional material touted the drink as containing pure New Zealand-sourced cheese to deliver “silky and smoothness to your mouth like a cheese cake”.

The “raw cheese” translation is a literal one, with more general translations labelling it a “cheese-flavoured latte.”

The developers worked with Fonterra’s Palmerston North staff to tune up the development, and Dai said there are plenty more beverage types in the pipeline to kick the new beverages centre off with.

The ‘raw cheese latte’ proved to be a launch success in China, selling over 6 million cups in its first week.

“Our food service client customers come to us and we work with R&D and chefs and marketing, and provide them with the ability to touch, taste and see the product before a launch, and even determine where it would be placed in store.”

He said client investment at scale is greater than Fonterra’s, with the co-operative providing the focus on dairy components.

“Our IP investment is relatively limited. We are not investing into any new technology, we have the products right here.”

Other recipes include a coffee with cream and avocado blend.

Fonterra’s newest application centre is its second facility in the Pearl River Delta region, home to some 86 million people and representing 12% of the country’s GDP. 

The other application centre in the area, located in the city of Guangzhou and only a short distance from Shenzhen, is mainly focused on bakery applications. 

A total of 1,434 new kinds of non-alcoholic beverages were launched by key tea and beverage brands in China last year.

“The beverages market is a blank slate for product development,” said Dai.

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