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The History And Background Of Fonterra

Paper Type: Free Essay Subject: Marketing
Wordcount: 3082 words Published: 4th May 2017

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Fonterra Co – operative Group was established in October 2001, referred to as Fonterra, the nature of the original is a cooperative, and the headquarters is located in Auckland, New Zealand. Fonterra group is the result of New Zealand’s the largest dairy companies and New Zealand dairy bureau cooperate and merge at that time, it’s New Zealand local biggest company. With annual sales of $8 billion, it is New Zealand’s largest companies, is sixth-biggest dairy producers in the world.

Although Fonterra was founded in 2001, but its history can be traced back to 200 years ago .At that times the New Zealand dairy industry just was born, from the small scale, development as one of the largest dairy products enterprise in the world.

Early: 1800-1930 s New Zealand dairy industry can be traced back to 1814, when missionaries Samuel Marsden (Samuel Marsden) bought a bull and two cows to New Zealand.

Unique temperate climate condition makes the dairy industry develop steadily.

The first cooperative nature cheese company in 1871 in Otago Peninsula (Otago Peninsula) was founded.

As with other cooperatives, its purpose is also established in order to resource integration.

To the beginning of the 20th century, New Zealand most dairy plant all takes cooperative mode.

By the 1830 s, cooperative total more than 400 companies. At the same time, dairy cooperatives began develop to overseas sales products.

Hundreds of small New Zealand dairy products enterprise is more and more difficult to meet the demand of the market abroad. So the government in 1923 has set up the dairy products export production control bureau to control dairy products export. This is the first history of dairy products.

Development and integration: 1930-1960 – s dairy bureau encourage dairy farmer to open up new markets, so that products can obtain better income.


The dairy industry also begins to integrate. Cooperative also started to pay attention to improve efficiency, with the aid of technology upgrade improvement transportation and refrigerated, including 1951 up application of milk tank car collect whole milk, introduced in 1955, the pasture milk cooling technology Market and product diversification: 1960-1990 s from 1960 s, New Zealand dairy industry began to implement market and the diversification of products. When New Zealand’s largest overseas markets Britain ready to join the European Economic Community, dairy bureau started looking for new markets. In the 80 s, dairy bureau have 19 overseas branches and affiliated enterprise, by 1995 to 80. New Zealand dairy bureau at that time has become the world’s largest dairy products marketing network. In order to be able to in the overseas market competition success, New Zealand dairy cooperatives have to be more efficient.

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In expanding overseas market at the same time, the milk agriculture in order to increase income and constantly develop new products. Dairy industry gradually develops a set of the consumer marketing structure, at the same time created some new brand. Cooperatives from the production of export British mainstream products butter and cheese to milk powder. New products including 1991 production of some of the world’s first can daub cream. Industrial cooperation: 1990-2000 s 1996 New Zealand government let dairy bureau assets transferred to cooperatives; at a competitive relationship of dairy cooperatives may not be a scrub to ensure the production and marketing of close cooperation. By the end of 2000, the 95% of the industry property rights belong to two companies: New Zealand dairy group and Kiwi cooperation dairy company (the other two small companies has the remaining 5% share). In the 1990 s, the threat of deregulating increased.

Dairy industries consider the many solutions to cope with the changes, and finally decided by an integrated company to the end of major dairy company between competitions.

Fonterra established: in 2001 in July 2001, 84% of the dairy farmer vote will be New Zealand dairy bureau, New Zealand dairy group and Kiwi cooperation dairy company merger.

In October the merger, become Fonterra co-operative group.

In order to avoid potential internal contradiction, Fonterra to the identity of the new company bought two cooperatives and dairy bureau assets.

The new company by accounts for the 90% of the dairy farmer have together.

Its location

When you walk into your local supermarket, you can find a lot of our brands.

Among the best known dairy brands in the world our products are loved by people for their balanced nutrition, quality craftsmanship and sheer indulgence. (Come from http://www.fonterra.com/nz/en/Our+Products/Our+Brands)

Their brands follow:

1. Anchor

2. Calci Yum

3. Country Soft

4 .De Winkel

5. Ferndale

6. Fresh ‘n Fruity

7. Galaxy

8. Kapiti

9. Mainland

10. Mammoth Supply Co.

11. Perfect Italiano

12. Primo

13. Symbio Probalance

14. Tip top

They main products are:

Milk , butter, ice cream, cheese, yoghurt, bread ,beverages milk powder and so on.

They mainly sales milk, because milk contains rich protein, can provide energy for body one day needs. So the milk loves by customer.


The company’s marketing objective

Every day, our knowledge, our products and our staffs combine to bring the best of dairy to our customers and consumers around the world and the best returns to our business. Each day, we add to our reputation.(Come from http://www.fonterra.com/nz/en/About/Our+Vision+and+Values)

They hope the best quality and the freshest milk to serve the masses, with the most reasonable price let everyone can drink milk.

Situation analysis:

Fonterra group is the largest dairy exporters in the world, accounting for one-third of global dairy products trade. Fonterra using cooperative mode, with about 10500 New Zealand dairy farmers , the milk agriculture to Fonterra with milk. Fonterra is New Zealand’s largest enterprise, accounting for 25% of the total amount of New Zealand export, export about 85% of the New Zealand milk. In the Taranaki built the world’s largest dairy factory – Whareroa, the total number of staff 16000, the year processing 20 billion litres of milk, the products are sold to more than 100 countries. In 2011, the business income amounted to 19.9 billion New Zealand dollars. Fonterra supply chain Fonterra core advantage is one of the fully integrated supply chains. Fonterra in New Zealand from mange: about 10500 shareholders, about 4 million cows, each pasture cattle and average of 376 head, each year about output milk solids 123000 kilograms. New Zealand dairy cow for about half Holstein cows rank, together Juan cow is also common varieties. North island of Waikato and Taranaki become a famous dairy culture zones have been more than one hundred years. South island of large-scale dairy is only recently developed. Fonterra owned by more than 400 cars milk tank car composed of teams, the annual shipping milk supply about 14 billion litters. The peak season in New Zealand (September – November), everyday shipping milk supply about 70 million litters. Every stroke has 70 million kilometres. Fonterra in the world has 84 plants: the New Zealand 24, Australia 10, the rest of the distribution all over the world, especially in South America. These plants total processing capacity of 20 billion litters per year. The production of dairy products including: anhydrous cream, butter, ghee, fat milk powder, concentrated milk protein separation, milk protein, cheddar cheese and special cheese, skimmed milk powder, whole milk powder, concentrated whey protein, lactoferrin, ethanol, nutrition powder, lactalbumin, medicinal grade lactose and consumption level of lactose. New Zealand Taranaki and Whareroa processing plant is the world’s largest dairy processing factory constant natural products are sold 105 markets. Fonterra has four business departments: Fonterra global trade, constant natural raw material powder, Fonterra consumption dairy and constant natural food service.

SWOT analysis :



The company has a lot of farm in New Zealand.

It’s the biggest dairy company.

More kinds of products.

Has skilful staffs

Increase many employment opportunities.

Cultivate more talents.

More people know these brand sales more easily.



The company scale is larger, management is more difficult.

Management is more difficult.

Target market analysis:

Segmentation strategy

A market segmentation strategy is a kind of method; create specifically for target market products. Product segmentation strategy refers to the design of the product itself. A company executive based product different strategy to distinguish between a product in a market segment from rival products, and their products in other market field. According to people of different preferences and different flavour, Fonterra produces various kinds of products, to attract the masses of customers, stimulate economic development.

the company’s target market profile

Fonterra is the world’s leading exporter of milk processor and dairy products. Our team in dairy products spectrum 16000 works; From the sustainable agriculture and farmers to provide consultation, ensure that our milk production meet the strict quality standard and delivery dairy nutrition every day more than 100 countries in worldwide.

Consumer Behaviour:

Consumer behaviour contains three aspects:

First, the consumption behaviour can be expressed in looking for, selection, purchase, and use, evaluation of goods and services activities. These activities itself is a means to meet the demand of consumer is their purpose;

Second, consumer behaviour is a complicated process. In any case, any one stage even the most important purchase stage, also cannot equal to the whole process of consumer behaviour. Consumer behaviour must include before buying, purchase and after buying the mental processes;

Third, consumers play a different role. In some cases, a person may only act as a role; In another case, a person may act as a variety of roles.

Social factors are:

(1) The social communication. Every consumer has its own “circle”, he will buy and “life circle” in people roughly similar of consumer goods, such as clothing, residential, durable consumer goods, catering fee, etc.

(2) Some kind of social public opinion and the influence of the social movement (for example to buy domestic movement).

Enterprise factors are:

(1) The enterprise upgrade of products, quality, performance, packing has the attractive;

(2) The famous brand product trademark gives consumer credit;

(3) Enterprise advertising and salesman persuaded by the formation of the “tension”;

(4) The enterprise position and service attitude;

(5) And commodity prices and service fee associated the height; And so on.

In addition, the customer to buy and form an important condition:

(1) Consumers to consume object is “know” and “understanding”;

(2) To buy the goods or services “experience” and “knowledge”;

(3) Based on the comparison of various commodities and “judgment” forms “attitude”; And so on.

In New Zealand Fonterra is New Zealand’s pride, if everyone want to buy the milk, they will buy Fonterra, because they trust and like Fonterra.

Product strategy:

With global demand dairy sustained growth, we need to make the most of the opportunity to Fonterra. We are to take decisive action to meet the nutritional needs in some of the world’s most exciting growth market, continue to promote better return our New Zealand farmer’s shareholders. (http://www.fonterra.com/nz/en/About/Our+Strategy+Refresh)

In a word, the consumer businesses contribute about half of profit. Fonterra have great brand and powerful position in Australia and New Zealand, in Asia and Latin America. They want to sell more nutrition, consumers and grow brand sales in the new market and new products. Will protect and build in their leadership in Australia, New Zealand, and the key to investment in emerging markets in Asia, Latin America, the Middle East and North Africa.

Fonterra cater business operation in 50 countries and produce more than $1 billion annual sales. Due to the rising demand for outdoor to have a meal, they want to:

Drive quick service restaurant business more difficult.

Sell more highly profitable products to the cook in the emerging markets of China, Southeast Asia, the Middle East and North Africa and Latin America.

Their innovative team will have an important role in the development of new products and solutions of commercial kitchen.

Anlene skeletal health brand is the world’s leading high calcium milk in Asia, with more than 60% market share. Bone health is only part of the whole, people need flexible joints and health muscles keep moving and active. With fast aging of the population in the west and China, they hope to focus their innovation to expand Anlene brand and develop new liquidity solutions for our customers, especially in China’s composition.

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Pediatric nutrition is one of the world’s fastest growing dairy products categories. Fonterra has been a leading manufacturer of components for multinational baby food Supplement Company. They want to be in this basis also make component leading Chinese baby nutrition company, using their New Zealand milk and factories. They also will continue to expand their An mum brand reliable nutrition for mother and child in southeast Asia and China. Their innovative team will support the business, focuses on the study of milk brain development and immunity.

Although New Zealand milk will always be the best one, they will grow milk volume offshore development high quality milk supply offshore and integrating them closer business. The main focus will be Chinese; they will build a few dairy industry centre and process for Chinese consumers of milk. Although they don’t have their own farms and factories, they will set out to management control when it comes to quality and safety. This is how they run integrated enterprise use the local milk in Australia and South America.

Pricing strategy:

Since July 31, 2009 for the fiscal year ended, milk price calculation according to Farm gate milk prices manual.

Farmgate milk prices for milk to the amount of payment by farmers’ shareholders. It is in accordance with the manual calculation by:

Determine the income, Fonterra will gain is equivalent to all the milk fonterra collection was converted into the specification of goods of whole milk powder (WMP) and skimmed milk powder (SMP), and their by-product white to take off the cow milk powder (BMP), butter and anhydrous milkfat (AMF). These products are the present “reference goods”. The price largely reflects the dollar prices achieved Global Dairy Trade per month (GDT) trade events, into New Zealand dollar use fonterra actual average monthly rate of foreign exchange.

Deduct cost, including transportation cost raw milk factory, and cost effective manufacturing reference commodity products and then put them sent to the exit point from New Zealand, as well as sales and management fees. They also include an amount of depreciation of fixed assets and a suitable investment return, including investment working capital. To a certain extent feasible, it is accord with Farmgate milk prices principle, cost is from Fonterra’s actual cost and these activities related. Assets include total amount of compensation they pay to farmers for the shareholders. This is a total amount, but it’s usually called based on each kg MS of Farmgate milk prices.

Promotional strategy:

Through advertising and publicity measures to attract the consumer, make consumer to enterprise’s products or services interest, thus cause demand, the initiative to buy goods. Its function route for, the enterprise take consumers to retailers, retailers to wholesalers, take wholesalers to production enterprises, this strategy applicable to: (1) the market, the products are convenience goods. (2) The commodity information must be to the fastest speed told the vast number of consumers. (3) To the product of the initial demand has presented the favourable trend, the market demand is rising. (4) Product has unique properties, and other products difference is obvious. (5) Can cause consumer some special feelings products. (6) Have sufficient funds to be used for advertising.

Because in the New Zealand Fonterra brand as is known to all, almost the entire New Zealand people all know, and in New Zealand the most common supermarkets have sales Fonterra products, so Fonterra basically accepted by people.

Distribution strategy:

The refresh to Fonterra a clear direction, they are creating a team have the correct function and tools support has a sound capital structure to make it happen. In the middle of 2012 they reorganize business for the best delivery strategy. Together with the proposed deal introducing farmers in November 2012, cooperatives have put all the elements to achieve their strategy.

Marketing research proposals:

Failure is the mother of success, from the failure to find methods, accumulated experience. Research and develop new products for all ages of people. Different people have different flavour .so they can develop more different flavour milk of juice. We know the nutrition is very important for ours body. We need rated nutrition every day. Many people like drink the milk or juice for the breakfast .so they can develop many product include many nutrition.


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