Probiotic-infused cream cakes adds dollop of health to Fonterra’s bottom line

Earlier this year, the New Zealand-based milk giant partnered with a customer in Greater China to develop a cake containing its probiotics “in response to rising consumer interest in the health benefits of probiotics,”​ said Fonterra CEO Miles Hurrell.

This interest has certainly bolstered the company’s first quarter, with improved performance in all three of its sales channels. Higher margins across the Co-op’s Ingredients, Foodservice and Consumer channels have driven the healthy boost in profit for the company, up 85% (to NZ$392m) after tax vs this time last year. EBIT is up 63% to $575 million. 

“As a result, we have lifted the midpoint of our forecast earnings for the year up 5 cents per share, with the range moving from 45-60 cents per share to 50-65 cents per share,”​ said  Hurrell. 

Rising demand for diary

Pic: Rich’s cakes on show at Bakery China

In January, Fonterra’s foodservice operations in Greater China saw a generous dollop of health boost consumer demand.

Dairy’s popularity is on the rise in China. Not a typical ingredient – around 92% of Asian people are genetically predisposed to lactase-deficiency – demand for dairy is expected to grow 2.4% between 2023 and 2032, according to Rabobank.

As such, foodservice products sold across the region are increasingly based on – or contain – cream, cheese and butter, which makes them the ideal vehicle to incorporate additional benefits, said foodservice VP for Greater China Justin Dai.

Enter Fonterra’s 50-strong team of Anchor Food Processionals (AFP), which concentrates on product innovation for bakeries, cafés, pre-packaged foods and quick-service restaurants.