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Responsible Dairies
Responsible dairies Written by: Nell Walker Produced by: Alex Barron
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New Zealand’s largest company, Fonterra, has an enormous global reach, with its dairy products found all over the world. Operations Director Aamir Mehdi describes to Business Review Middle East how the company has grown, and its increasing impact on the region
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ew Zealand’s largest company, Fonterra, began as a merger of the New Zealand Dairy Board and Kiwi Cooperative Dairies in 2001, having previously operated as several smaller co-ops. It is owned by over 10,000 farmers and handles more than 90 percent of the milk produced within the country. While Fonterra as a corporate entity is relatively new, its heritage goes back nearly 150 years – Anchor was founded in 1886 and remains incredibly popular across each country in which Fonterra operates. Fonterra’s reach spreads over 130 countries, maintaining two distinct arms of business: Fonterra Ingredients, which produces an array of daily ingredients to sell
to huge food companies such as Nestle, Danone and Kraft, and a relatively smaller Brands division, specialising in converting those same ingredients to valueadded products sold under Fonterra’s own brand names, making Fonterra one of the few fully-integrated dairy supply chain companies in the world. New Zealand, with its human population of around four million, has between five and six million cows, leaving Fonterra needing to find homes for billions of litres of milk. The natural solution was to become a worldwide dairy exporter – now the largest in the world – and the fifth largest dairy producer. Aamir Mehdi, Operations Director at Fonterra Middle East, has
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helped to develop the company’s footprint in Africa with a brand enormous global reach from its new factory in Addis Ababa. Middle East headquarters in Dubai. “We sell milk powder, butter, and “I work within the Middle East/ a variety of cheeses and creams, Africa/Central but in the absence Asia sector of of access to local Responsible Dairying the business,” he milk pools in this says. “Of about region we choose 63 countries in - for now - not to this region, we are compete with the active within 25 of big names in fresh them. I look after milk products. We the operations side are committed which is composed to move New of manufacturing, Zealand’s pure dairy supply chain, nutrition across R&D, procurement, and supporting our markets; that is where all our new market expansion projects. dairy ingredients come from and This is a very wide region with then, and there’s a lot of processing a lot of emerging markets. We involved to turn it into the consumer already have a presence with products we sell here. Innovation our own manufacturing facility in is a high priority; this can only Saudi Arabia – our big regional be done if you have local assets. manufacturing site – and we’ve We can’t get everything readyrecently expanded our asset made from New Zealand.”
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Everyday nutrition to dairy nutrition, and if they can The portfolio for Mehdi’s region get it, it’s very expensive,” Mehdi of the business is dominated by says. “We have developed a Everyday Nutrition, which targets product which targets deficiencies products that people consume in children but costs less than a for basic nourishment. It involves can of soda. Addressing the issues a focus upon products which of affordability and availability are would be found on the typical our main strategy for expansion.” household dining table for everyday consumption like Corporate identity butter, milk Fonterra places powder, and a huge amount spreadable of focus on its cheese. identity with Number of employees at Fonterra also has its customers, Fonterra Brands Middle East Specialist Nutrition consumers, and offerings for adults and shareholders. This identity children. The company intends a involves being responsible in the great deal of expansion into Africa, way that it makes its nutrition for which the concept of Everyday available, including the basic quality Nutrition customised for local of the product, hygiene factors, needs - especially in markets with processing techniques, ingredients, deficiencies - is proving popular. and care for the environment. “There are almost 100 million The company complies with the people in Ethiopia with little access highest standards in the world,
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ensuring that the cows are almost exclusively grass-fed with no chemical hormones involved. Sustainability is a major component of this identity, and Fonterra places enormous
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significance on the concept: “Our dedication to sustainable standards allows us to work towards becoming seen as the most trusted source of dairy nutrition in the world,” Mehdi says. “We go to great lengths to signify and demonstrate that. As an example we are installing X-ray machines to check for contamination in all production lines, which sometimes cost twice as much as entire packing lines of some of our competitors; the effort we make to live by our aim to be the most trusted dairy is demonstrated at all touch-points - in the way we treat our animal herds, our people, and our customers.” Farming operations The farming operation in New Zealand is one of the most sophisticated in the world; the policies it has in place, the treatment of animals, milking techniques,
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and equipment are all state-of-theart. The country’s beef industry allows for a lot of collaboration in the ethical treatment of cows, and Fonterra also works with environmental protection groups regarding the best ways to recycle the bio-waste they produce. As the biggest company in the nation, Fonterra is the employer of choice, and the scale of the business attracts key talent – beyond New Zealand, Fonterra relies on the strength of its brands and reputation for the same. “Our sheer household presence across the world is a huge advantage,” says Mehdi. “The reach we have is massive, and people who come and work with us become ambassadors. When you see our products on the shelves, especially in the Middle East where there are aisles and aisles filled with options for consumers, we have something
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for every dining occasion. In terms of quality and freshness we believe our offerings are both world standard and differentiated. “One of the strategies that we continue to work on is the strength of our brand, and what it stands for in terms of improving the life and health of families – that’s very close to our hearts. We don’t use a ‘one size fits all’ approach for products, especially in a place as diverse as the Middle East.” Expansion Fonterra’s expansion plans are quite focused towards Africa as well as building on the strength of current competencies in KSA. Mehdi considers the company to be hugely committed to the MEA region, with the Saudi factory in particular undergoing projects for new production lines that will make cheese products for every
Our Supply Chain
segment, suited to the local palate. “When we look at the countries that we are present in, as well as where we are expanding, there is also focus on what we contribute back to the community. Raising The quality and skill set of local talent especially in KSA and Ethiopia is very high up on the agenda, We are spending time and effort in training, development and recruitment of
fresh local talent from universities who can be groomed for future leadership of this business. Setting up a local R&D team in Saudi is a strong example of this. “We’ll continue to invest heavily in pursuit of this goal of raising the capabilities of local talent. We want to be known as a very responsible corporate citizen, who is committed to this region for the long run.”
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API Trio Tower, Sheikh Zayed Rd. Dubai, UAE +971 4 338 8549 www.fonterra.com