2021 A Year in Review
14 Dec 2021
Almost two years into the pandemic, it’s fair to say that many of the changes we see around us are not temporary. COVID-19 has re-shaped the way the average consumer sees and experiences the world. Trends that we thought may have been temporary – such as the heightened focus on health and wellness – look set to stay, and in fact are stronger than ever in the face of the ongoing health risk our global population faces.
With uncertainty high, one thing consumers can control is their nutrition, and this is evident as we watch consumers increasingly select foods that provide them with specific health benefits, such as increased immunity and enhanced mental wellbeing. This is happening in the context of supply chain challenges, as consumers turn increasingly to e-commerce, and supply chains are stretched beyond their limits in a perfect pandemic storm, forced to navigate not only increased volumes but also changing restrictions and labour shortages.
At the same time, we still have the challenges we were facing pre-pandemic, such as climate change. Sustainable food systems as well as food security have never been higher on the agenda, and the business community has a responsibility to act with urgency. That said, with great challenge comes great opportunity, and as I look to 2022, I do so with anticipation, knowing that the food industry serves an incredible purpose in feeding the world, and seeing the collaboration within Fonterra, and in and between industries, to tackle the challenges our world faces together.
Top of mind for consumers
Nutrition nutrition nutrition
With the adjustment to the new norm in a world with COVID-19, nutrition has continued to play a major role in influencing consumers' product choices, and this was a key theme in Perspective in 2021.
In February we spoke to Michelle Teodoro, Associate Director Food Science, Asia Pacific, Mintel and looked at dairy’s role in stress management; namely, how dairy can contribute to fueling a healthy personal microbiome which can, in turn, help personal wellbeing.
The next frontier in food will be anchored in enabling cognitive wellness through natural and scientifically backed solutions
Michelle Teodoro | Associate Director Food Science | Asia Pacific, Mintel
There continues to be huge potential to build connections between specialty ingredients such as phospholipids and brain health, mental performance or mood by highlighting its innate nutrition profile. Functional ingredients like probiotics can also be a significant part of product formulations to capture emerging demand for nutritious and naturally functional products.
Within nutrition, one size doesn’t fit all, and personalised nutrition is emerging as a trend for adults and potentially children.
We have seen an increased demand for targeted nutrition for children with more demand for premium ingredients focused on digestion, immunity and brain health. Although it isn’t quite in the personalised nutrition space yet, it may not be far away, and it’s likely this need-focused approach will continue to play an important role in addressing a child’s future requirements. Different triggers at each life stage are being used to reassess a child’s nutritional health and wellbeing needs.
Personalised adult nutrition is increasing in popularity but is also complex. It requires a good understanding of the individual from their biology to their lifestyle, in addition to knowledge of what drives decision making and behaviour change. However complex it may seem, our expertise and data in this area could prove beneficial when exploring this field.
The benefit of this complicated work is not only helping people to feel better, it’s also offering businesses a fruitful emerging market.
In 2020, UBS estimated that the global personalised nutrition market will be worth (up to) $3.5bn by 2025 (1)
The Digital Diet
We spoke with María Mascaraque, Industry Manager Food and Nutrition, Euromonitor International in May who discussed that as consumers spend more time online, technology has the potential to aid personalised nutrition.
Digital solutions that can help improve mood states by creating balanced “digital diets” are attempting to break new ground for the future of health and wellness.
With the world already using apps, blogs and social media to discover diets, stick to goals, help with intolerances or gain muscle, technology could be the key to unlocking the personalised nutrition plan. We have recently partnered with Sun Genomics, who customise a ‘precision probiotic’ supplement, formulated to address individual needs. We saw that in working together we could better understand how these super strains could target specific consumer health issues, especially as consumers continue to prioritise their health more than ever with the increased concerns around immunity due to COVID-19.
The emergence of the conscious consumer
Around the world, we are seeing the rise of a new type of consumer – the conscious consumer. For the conscious consumer, purchase decisions are driven by a commitment to positive social, economic, and environmental impact. Studies have shown that around 45% of consumers have changed their diet to lead a more environmentally friendly lifestyle2.
We have also seen the emergence of two macro consumer trends in 2021: food origins and natural, clean labels. In September, we spoke with Ayusha Amatya, Research Analyst Euromonitor International to understand a bit more about developing consumer trends.
Consumers are drawn to products with local origins as they are positively associated with authenticity, quality as well as transparency in terms of the journey of the food they are consuming, with around 20% of global consumers preferring packaged food with a ‘clean label’ (3).
A clean label means consumers want to see familiar food names and not additives, E-numbers and chemicals. To maintain relationships with consumers, we must place emphasis on traceability, provenance, sustainable production practices and animal welfare.
This desire for healthier, more sustainable options is one of the reasons for an increase in plant-based dairy alternatives. While the plant-based market presents an undeniably innovative and exciting opportunity, we remain focused on providing health conscious consumers with all the benefits of dairy’s nutritional profile and clean label credentials.
That said, as most consumers select from both plant-based and animal-based products, there is a vast space to fill with creative blends and flavours that satisfy consumer desires while keeping us at the forefront of innovation.
Global Trade Impacts
Global supply chain issues
In June, we focused on Fonterra’s strategic partnership with ocean freighter Kotahi. We looked at our resilience during intensely difficult supply chain conditions, as well as unprecedented volumes caused, primarily, by the flow on impacts of the pandemic and changing dynamics such as the rise of E-commerce.
We looked at our resilience during intensely difficult supply chain conditions, as well as unprecedented volumes caused, primarily, by the flow on impacts of the pandemic and changing dynamics such as the rise of E-commerce.4
Following 2008’s global financial crisis, New Zealand exporters depended on international shipping lines to ensure quality and reliability of services. By partnering with Kotahi, we built a clear strategy towards sustainable networks. Our aim is to remove waste and bring bigger ships to our shores.
Our partnership has proved hugely valuable in managing the disruption as it allows us to move our dairy products globally in a reliable and efficient manner.
In a modern context, during a time of unparalleled uncertainty, for an island as remote as New Zealand to have such a well-tethered connection to the rest of the world provides some confidence for businesses in the security of their supply. It also reinforces our commitment to safeguarding the future in many, not always obvious, forms. In 2022, we can expect to continue to see challenges to the supply chain, as delays build up and the pandemic continues to interrupt the logistical ecosystem in which we operate.
At the end of the day, supply chains are built on the efforts of people – truck drivers, staff at ports and in ships or at key transit locations.
– so we must continue to work to protect people around the world, for their health and also for the health of our supply chains and food security. Resolving today’s supply chain challenges will also take collaboration between different players in the logistics industry, and at times the intervention of governments where possible.
That said, we’re in a relatively good position – it’s clear that the work we have been doing to create a robust supply chain solution has created a competitive advantage for the New Zealand food exporters we support.
Brexit and the NZ/UK free trade deal
In December 2020, a Brexit deal was finally reached between the UK and the EU. Although seemingly good news, many businesses and industries have faced significant cost increases and shipping delays due to the logistical complexity of the new border procedures – a problem still far from solved, and something that intensifies the supply chain issue for the region.
After Brexit, with the UK now free to make its own trade agreements, a free trade agreement was reached in-principle between New Zealand and the UK. For New Zealand, the deal means a potential economic benefit of $970 million per year. Immediate tariff removal will be granted to 97% of goods, with all remaining tariffs falling away within 15 years. 5
For dairy products, New Zealand’s largest export commodity, it was quite a result.Our CEO Miles Hurrell explained that the UK’s commitment, in principle, to the removal of tariffs on all dairy products over five years or less (with good immediate quota access on cheese and butter in the interim) was a positive result for New Zealand.
“This is a historic outcome for New Zealand. The UK is the second largest importer of dairy by value, with customers and consumers in high value market segments who are willing to pay for New Zealand provenance, our sustainability credentials and our innovation.”
Working together now to help protect the future
COP26 – The climate crisis is undeniably here
In November, world leaders met in Glasgow to commit to take actions to reduce emissions to halt global warming to 1.5 degrees. Leaders agree that we need to do more as current policies and commitments only limit global warming to 2.5-2.9 degrees. This difference is significant and further efforts will be required to limit warming and its forecasted impact on our world, which includes a rise in sea levels and more frequent extreme weather events.
The rise of the conscious consumer coupled with investor pressure is leading companies to set targets to reduce their own emissions and emissions from their suppliers. Companies are expecting suppliers to demonstrate that they have a roadmap in place to support their emissions reduction targets, and will begin to move away from those suppliers who do not.
Now, more than ever, it is time for collaboration, to protect the future for everyone. Fonterra New Zealand has one of the lowest on-farm carbon footprints in the world and has committed to continue to be a leader in sustainability.
New Zealand grass-fed dairy is a better sustainability choice
Not only is it important that we work together to reduce the impact on the planet, we must also do it with animal welfare in mind. Recent research conducted by Kantar for Fonterra showed that consumers see a direct link between the care given to animals and delivering a safe and nutritious product.6
In October, we spoke with Senior Veterinary Manager Michael Shallcrass about our ‘Cared for Cows’ approach and the practices we use to ensure our cows’ wellbeing.
“Our Fonterra New Zealand cows spend on average 97% of their time outside on pasture. At over 350 days a year, that’s more than anywhere else in the world.”
The importance of the ‘Cared for Cows’ proposition cannot be understated as it supports multiple consumer ethical concerns: journey transparency, clean label, natural, and animal wellbeing.
As we aim to continue to lead the industry in sustainable dairying, we have the opportunity, and the responsibility, to influence for good and make a difference for New Zealand and the world.
In September, University of Auckland-affiliated researchers toilet-trained cows using a reward system. By reducing free-roam urinations – even just by 10-20% – greenhouse gas emissions and water contamination could be significantly reduced.7
As Fonterra’s farmers make up around 20% of all New Zealand’s gross emissions,8 this could be an invaluable tool moving forward. Another exciting on-farm innovation is Fonterra’s very own Kowbucha™. Our Director of Category Strategy & Innovation, Mark Piper, explains.
“We have one of the world’s largest dairy culture collections to call on. We’re using some of these cultures to create new fermentations we’re calling Kowbucha to potentially switch off the bugs that create the methane in cows.
It’s alternative solutions like this, stretching our thinking as we strive to retain the naturalness of New Zealand dairy, while reducing emissions, that are a key focus for our innovations.
Looking forward to 2022, we will retain our future vision with a particular focus on sustainability in all its forms. Here at Fonterra, we are committed to producing dairy nutrition in a way that cares for people, animals and our environment.
Chief Executive Officer AMENA (Africa, Middle East, Europe, North Asia and the Americas)
With over 30 years at Fonterra and in the global dairy industry, Kelvin Wickham is driven by his belief in dairy as a high-quality source of nutrition for the world. In his current role as the CEO of AMENA, he is responsible for Fonterra’s activities across consumer, foodservice and ingredients in Africa, Middle East, Europe, North Asia and the Americas. He also oversees Fonterra’s Active Living nutrition unit, which is focused on developing solutions that cater to very specific consumer needs, including patient wellness, physical wellness, inner wellness and mental wellness. Over his career, Kelvin has played a key role in building Fonterra’s ingredient’s brand, NZMP, across the world, developing Fonterra’s business in expanding markets, and establishing key customer relationships and partnerships. He’s also led during pivotal moments in the history of Fonterra and the dairy industry. This includes when he oversaw the launch of Global Dairy Trade, a first for the industry, which in addition to making global online dairy sales possible, offered transparent price discovery to support the development of dairy price risk management tools. Kelvin holds a Chemical and Materials Engineering Degree, a Master of Management and a Diploma of Dairy Science and Technology. He lives in Amsterdam, Europe with his wife and is a keen swimmer and cyclist.
-  NZMP Perspective August – Nick Morgan, Owner, MD and Consultant, Nutrition Integrated: UBS Analysis, Q Series. Future of Food III: Is personalised nutrition the next big disrupter (14th Jan 2020) Link: https://view.publitas.com/nzmp-1/nzmp-perspective-august-2021
-  www.fonterra.com/nz/en/our-stories/articles/consumers-driving-sustainability. html.
-  NZMP Perspective September: “Euromonitor International Health and Nutrition survey”.
-  Gordon Carlyle, Director Global Supply Chain, Fonterra, NZMP Perspective June
-  https://www.stuff.co.nz/business/126745414/exporters-welcome-fantastic-uk
-  Kantar, 2020, qualitative consumer research in nine key markets.
-  https://www.rnz.co.nz/news/country/451424/mooloo-researchers-find-toilettraining-cows-is-possible
-  https://www.fonterra.com/nz/en/our-stories/articles/doing-our-bit-for-climatechange.htm