Fonterra CEO alerts dairy industry to rising soy threat

Related tags Milk

Andrew Ferrier, Fonterra's CEO, today reiterated calls for a united
dairy industry amid the mounting threat of cheaper soy, nut and
rice-based dairy alternatives, Tom Armitage reports.

Speaking in Victoria, Australia, Ferrier urged the country's milk producers to "work collaboratively at an industry level to defend dairy's position as a superior, safe and cost effective source of nutrition and to build confidence in dairy and the health benefits of milk."

He claimed that soy, nut and rice-based dairy alternatives are being "aggressively marketed as milk and sometimes are even fortified with nutrients to help them mount a challenge to dairy."

But it is not just aggressive marketing tactics used by soy producers that have helped spark rising consumer interest in soy.

In 1999, for instance, the Malaysian Ministry of Youth and Sports launched a two-month marketing campaign to encourage consumers to buy packaged soya milk.

Similarly, the Health Promotion Board of Singapore and the Ministry of Public Health in Thailand have both previously used education campaigns to inform consumers of the health benefits of drinking soya milk or consuming soy-based foods.

According to industry analysts Organic Monitor​, the South-East Asian non-dairy drinks market notched up an estimated US$220 million in retail sales last year, with Malaysia's Yeo Hiap Seng and Green Spot in Thailand both consolidating their respective market-leading positions in each country.

"We must collaborate to ensure the public perception of dairy and its nutritional qualities is shaped by us, not by competitors who position their products as healthier, cheaper alternatives to dairy,"​ Ferrier said.

"Dairy has a significant role to play, not only in nutrition, but also in addressing specific health concerns such as obesity, osteoporosis and immune functions,"​ he added.

The soy threat, however, has alerted dairy industry figures towards the more lucrative value-added dairy health products and convenience foods sectors across the world's developed dairy markets - something which has helped Fonterra become the world's biggest dairy ingredients company, accounting for 60 per cent of its annual turnover of approximately AUS$1.4 billion.

Ferrier also hailed dairy as being a low cost nutritional product, capable of penetrating the lucrative under-developed Chinese milk market: "We should also be encouraged by the demand growth that's right on our doorstep in Asia"​.

But despite attempts to convince Chinese consumers of the health benefits of milk, the Chinese population still has the lowest consumption of milk per capita in the world - an estimated two litres per year.

In 2004 China's spending on milk stood at a mere US$1.8 per capita (€1.2) per year, against Western Europe's US$54.6 (€41.9), giving an indication not only of China's relative under-development in the dairy sector, but also an idea of its growth potential.

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