Alibaba, Fonterra Redefine Fresh Milk in China

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Alibaba, Fonterra Redefine Fresh Milk in China



Alibaba’s Freshippo (also known as Hema) supermarket and New Zealand dairy giant Fonterra are redefining the “fresh” in fresh milk for Chinese shoppers, shortening the shelf life of milk sold in stores down to less than 24 hours from the usual seven to 10 days.

The move aims to meet the evolving preferences of Chinese consumers who shun preservatives in their quest for a healthier lifestyle.

Available at Freshippo stores and a few selected Alibaba-invested RT-marts in Shanghai, both online and offline shoppers can find Fonterra milk with labels that match each day of the week. The milk is produced and collected each day at Fonterra’s Hebei dairy hub, one of the two the company operates in China.

The latest tie-up is part of Freshippo’s“Daily Fresh” program, which sees a host of fresh produce and meats removed from shelves at day-end and replaced with fresh product the following morning.

“The result has been largely successful. We find our customers very much enjoy the option of having the freshest milk, as many of them are becoming more health- conscious,” said Sam Kuo, general manager of Freshippo’s purchasing department. “Leveraging Fonterra’s commitment to freshness and safety, together we can offer our customers the highest quality of fresh milk.”

Fonterra, the world’s biggest processor of dairy products, is New Zealand’s largest company in terms of revenue. It contributes 10% of the country’s gross domestic product.

Fonterra views China as its most important overseas market. The two Fonterra-operated dairy hubs in Shanxi and Hebei Province are the industry’s standard-bearers, by being the first in the country to receive the Safe Quality Food certification, a worldwide-recognized accreditation in food-safety standard and quality. To date, over 350 million liters of fresh milk are produced annually at these two farms.

Fresh milk is gaining rapid traction in China, as more consumers believe fresh milk, which contains no preservatives, is healthier and richer in nutrients compared with ultra-high temperature pasteurized milk, or long-shelf life milk that can last from six to nine months. But despite the growing popularity, Chinese consumer’s milk consumption is still considered low, at about 33 kilograms, roughly one-third of the world’s average, according to a 2016 U.S. Department of Agriculture report.

“Milk consumption has plenty of growth potential, but food safety concerns drag on increased consumer demand,” the report said.

Fonterra’s own studies show only 22% of Chinese consumers are fresh milk drinkers.

“Shoppers here in China are becoming increasingly sophisticated in terms of their tastes and preferences, which are being driving by rising household incomes,” said Christina Zhu, president of Fonterra Greater China.

In a meeting with Alibaba’s Chief Executive Officer Daniel Zhang on Monday, Theo Spierings, the CEO of Fonterra, said his company is looking to explore new ways to bring more high-quality dairy products to China, one of Fonterra’s largest global markets.

Both companies are discussing options, such as incorporating more of Fonterra’s ingredients and expertise into Freshippo’s baked-goods section and diversifying the assortment of products in the future. Currently, only whole milk in 750-milliliter containers are sold in the selected Freshippo and RT Mart stores.

 

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