Fonterra’s China strategy: R&D focus on nutrition for beauty and cognition, alongside immunity needs

By Tingmin Koe contact

- Last updated on GMT

Fonterra is building a R&D centre in Shanghai and an application centre in Wuhan next year. ©Getty Images
Fonterra is building a R&D centre in Shanghai and an application centre in Wuhan next year. ©Getty Images

Related tags: Fonterra, China, R&D

Fonterra is gearing its China R&D nutrition strategy around beauty and mental health, alongside tapping in to the ongoing trend for immune health products.

The company will be building a R&D centre in Shanghai, as well as an application centre in Wuhan next year to meet the market demands. 

The Shanghai R&D centre is a collaboration with Anchor Centre for Certification (ACC) – a certification and analysis test centre.

The co-own laboratory will be known as the Fonterra-ACC Shanghai Innovation Centre, Teh-Han Chow, CEO of Fonterra Greater China told NutraIngredients-Asia.

In light of the COVID-19 pandemic, the company has seen a heightened demand for nutrition that supports immune health.

“There has been a sharp increase in enquiries about immunity boosting ingredients, particularly our probiotics,”​ he said.

He cited NZMP’s proprietary strains Lacticaseibacillus rhamnosus ​HN001 and Bifidobaterium animalis subspecies lactis ​HN019 as examples that were clinically proven to support digestive health and immunity.

The two strain are already used in Assura – a “super-premium” milk formula for pregnant mothers​. The product was available for sale in China since October last year.

Another area of market interest is physical fitness. Chow said that the Chinese consumers were looking for nutrition that could help them gain muscles and reduce body fat.

Aside from immune and physical fitness, he observed that nutrition to support beauty and mental wellbeing were also coming into the spotlight in China.

“We are working to unlock new potential in ingredients such as probiotics and Milk Fat Globule Membrane (MFGM) to see how they can benefit consumers in the post-COVID-19 world,” ​he said.

MFGM is traditionally used in infant nutrition, but the company said that since the component could reach the brain, it could potentially be used in managing stress, improving cognitive and mental performance​ – effects that have been seen in animal studies.

Beyond functional nutrition ingredients, the R&D lab in China would also focus on consumer science, sensory testing, and packaging. 

The work will be applied across Fonterra Greater China’s key dairy products, including milk powder, liquid dairy, yoghurt, soft serve, processed cheese, and cream.

The plan to set up new centres was first announced by CEO Miles Hurrell. Speaking at the sixth China Business Summit in Auckland on July 20, he spoke about the opportunities that New Zealand businesses and enterprises could pursue in China.

New Zealand prime minister Jacinda Ardern and Chinese ambassador Wu Xi were also present.

Greater China has now become one of Fonterra’s largest and most important strategic markets, accountable for about one-quarter of its global business, said Chow.

Keeping up with changes 

China’s “fast-changing” ​and “diversified”​ consumption landscape has offered plenty of opportunities for the dairy company, Chow said.

Therefore, apart from meeting functional nutritional needs, he said that another strategy that the company had, was to integrate dairy products into local Chinese dining habits, with the younger generation as the target audience.  

The market has undergone tremendous changes in recent decades, and the Chinese consumers are open-minded and curious to try new things.”

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