Last month, Fonterra Europe, the regional arm of New Zealand-based dairy cooperative Fonterra, announced the launch of NZMP europro - a whey protein ingredient sourced in Europe through partnerships with established cheese manufacturers.
Fonterra began its European sourcing efforts in 2011, when it formed a joint venture with British dairy processor, First Milk. It has since partnered with Lithuanian processor, Rokiškio, and signed an agreement with Dutch firm, A-Ware Food, to establish separate but “mutually-beneficial” neighboring cheese and whey protein ingredients plants in Heerenveen. Fonterra expects operations at the plant to begin in December 2014.
Speaking with DairyReporter.com, Robert Lilly, marketing and innovation project manager at Fonterra Europe, said that the launch of NZMP europro marks the culmination of its sourcing efforts and signals that it is "here to stay."
“Scoping out other opportunities”
“We’re investing heavily, and we’re here to stay,” said Lilly. “We have established partnerships with First Milk in the UK, with Rokiškio in Lithuania, and we have invested here at Heerenveen,” he said.
Fonterra is "also exploring other" sourcing opportunities in Eastern Europe, Lilly said.
“At the moment, the priority is getting the Heerenveen plant online, but we are also scoping out other opportunities. In the next couple of years we’ll be looking to establish more partnerships.”
“What we’re trying to promote is that we are here to stay – we’re investing a lot and we’ve launched this product," he said.
Whey protein demand “booming”
Lilly cited growing global consumer demand for dairy, and particularly whey protein, as a key driver of Fonterra's recent European whey sourcing efforts.
“Whey used to be just a by-product of cheese production,” said Lilly. “Now demand for whey protein is booming.”
While a significant amount of this demand is coming from Asia, much of the NZMP europro produced in the UK, Lithuania, and the Netherlands will not leave Europe.
“We have a large number of customers in Europe," said Lilly. "The whey protein being produced by First Milk and here in Heerenveen will be shipped out to Asia. But this whey protein is being produced in Europe, so our customers here will come first.”
By producing NZMP europro, Fonterra says it can guarantee short lead times and greater supply flexibility for its European customers.
“New Zealand is a small country…”
New Zealand-based Fonterra’s move overseas was inspired by the arrival of current CEO, Theo Spierings, who took the helm in 2012. Spierings refreshed the cooperative’s global strategy, devising seven key strategic paths, including the development of high quality offshore milk supplies.
“One of these seven key strategic paths was the establishment of regional milk pools,” Lilly said. “After all, New Zealand is a small country, so we have to look abroad.”
“We’ve established farm hubs in China and South America, but with Europe being an established market; it has been quite easy to establish reliable partnerships.”
“We don’t see it as an absolute necessity to own the farms and plants, but we do insist on managing every aspect of the supply chain. We want the whey protein we produce in Europe to be as good as the whey protein we produce in New Zealand,” he added.