Fonterra has re-energised the long-established and traditional Japanese market for imported butter and cheese, emphasising the grass-fed origin of New Zealand products.
NZ is now the largest country-specific source of butter in Japan after its domestic production, and in 2022 overtook Australia as the country’s leading source of imported cheese.
Last year NZ sold US$275 million (about $422m) worth of cheese and US$35m in butter in Japan. Cheese revenue has fluctuated over the past decade, but butter receipts have grown steadily.
The European Union’s 27 countries, collectively, sell more cheese in Japan than NZ does, but individually the Netherlands, Italy, Germany, Denmark, Ireland and France each sell about half of the value NZ does.
France is number two in butter.
All countries must contend with the tariffs and quotas that Japan believes protect its small domestic dairy farms, although some barriers are coming down within the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.
Noteworthy is new duty-free quota access for NZ whey products and processed cheese, and the same for butter and milk powders, as well as the elimination of tariffs on nearly all cheeses by April 2033.
Japan is also a strong protein ingredient market for Fonterra, as its aging society looks for advanced nutritional products for active living, Fonterra chief operations officer Fraser Whineray said.
Japan’s domestic milk production is falling as market access is opening, creating many good opportunities for further long-term growth.
“Reaching number one for imports of butter and cheese is very positive, because we haven’t been in that position before in over 40 years of our presence in Japan.
“Japan has a falling population and static economic growth, but with our partners we have introduced specialty ingredients and new types of butters.
“Japanese people have long had a very positive image of New Zealand, helped by the Anchor billboards,” Whineray said.
“When they come here many are astonished to find that Mt Taranaki, blue skies and the green grass are real, not made up.”
Fonterra has not sold liquid or UHT milks in Japan, and the osteoporosis need for Anlene is not like that in other southeast Asian countries.
Japan has its own large, well-established dairy companies and about 1.3 million dairy cattle and 14,000 herds, mostly kept on small feedlots and fed grain.
“Farmers buying grain feeds in US dollars and selling their milk in yen have been squeezed recently,” Whineray said.
Anchor Food Professionals chefs work with hospitality and food service employees to make cakes and confectioneries from Fonterra ingredients like butter, cream, hard cheese, mozzarella, cream cheese and sour cream.
“Those chefs demand high quality, consistency, on-time delivery and a steady stream of new applications and suggestions,” Whineray said.
Fonterra’s grass-fed marketing highlights the origin and the aesthetics of NZ products.
“Higher colour from beta-carotene links back to how our dairy products are produced, and where.
“It helps explain the connection to the provenance and what cows eat.
“Producers in other countries are not readily able to change to grass-fed, because of their climates and farming systems.
“If a cow is grass-fed it has to walk around and graze for itself – just sunlight, grass and water – and that becomes the foundation for our low-carbon positioning; far less than our competitors.”
Attributes of grass-fed dairy products, aside from taste, flavour and composition, are still being discovered, Whineray said.
