Fonterra bets big on Southeast Asia Foodservice

ASIA – Fonterra has intensified its focus on Southeast Asia as a key growth engine for its foodservice division following the divestment of its consumer business.

The co-op’s foodservice channel, operating under the Anchor Food Professionals brand, now stands alongside ingredients as one of Fonterra’s two core businesses and contributed 24% of earnings last year.

The company reported strong momentum across Greater China and Southeast Asia, with milk solids shipped through foodservice increasing from 74 million kgMS in 2022 to 100 million kgMS in the first half of the current financial year.

Foodservice revenue climbed 7% to $2.6 billion, while earnings before interest and tax reached US$198 million. Fonterra is now targeting foodservice to account for 16% of total milk solids by 2027.

Leading the regional expansion is Daniel Hitz, Fonterra’s newly appointed director of Southeast Asia foodservice. Hitz said the co-op previously managed the region through fragmented country-based systems, but the new strategy aims to create a consolidated regional model with localized execution.

The restructuring is expected to improve logistics, demand planning, and operational efficiency while supporting faster business growth.

Fonterra believes Southeast Asia offers a growth trajectory similar to China’s earlier dairy expansion, although the region’s cultural diversity and fragmented consumer preferences require a more tailored approach.

Hitz noted that dairy products are increasingly associated with health and rising living standards across the region, creating opportunities for premium New Zealand grass-fed products such as Anchor and Westgold butter.

Additionally, Teh-han Chow, Fonterra’s President for Global Foodservice and China CEO, said the country’s dairy market still has significant room to grow, as consumers gradually adopt milk and related products as part of a daily diet.

Government calls to boost dairy intake are reinforcing that trajectory. Han Jun, minister of agriculture and rural affairs, said last month that dairy intake in China remains insufficient. Specifically, per capita dairy consumption is only one-third of the global average.

While dairy is not yet a staple for many Chinese consumers, its use is increasingly embedded in popular foods and beverages. Products such as pizza, milk tea and baked goods have introduced dairy as a key ingredient, often without consumers explicitly seeking it out.

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