2022 Year in Review
In this article, Judith Swales, CEO of Global Markets, summarises key trends and shares her thoughts on the past year
20 Dec 2022
Welcome to our year in review for NZMP Perspective and my own reflections on the trends we’ve seen developing. 2022 saw conditions continue to change in New Zealand and around the world. While we are now living in a post-Covid normal world, the past three years have shown us that the world is increasingly unpredictable; changes are rapid, supply chains are fragile, and climate change and its impacts, command our attention.
Throughout 2022, we saw a rise in the conscious consumer focusing more on self-care and immunity, sustainability, and lifestyle budgets. This was a key theme in Perspective throughout 2022, and we expect it to gain even more momentum in the new year.
The good news is that customer and consumer demand is growing for sustainable dairy, produced naturally. Consumers want natural products that promote wellbeing and provide multiple benefits, and that are science-backed and evidence-based to support wellbeing at all life stages.
At Fonterra, we have a clear strategy to address this demand, which sees us prioritise New Zealand milk, and lead in sustainability, dairy innovation and science.
We have a true and proven sustainability story. Our New Zealand farms have the lowest carbon footprint among major dairy producers globally and our milk comes from grass-fed herds which are well cared for. This ties in to our world-class dairy expertise which allows us to partner with our customers and respond to the evolving needs of consumers. Given the quality, science and sustainability of our dairy, we see unlimited potential for it.
In June this year, Fonterra announced that it was combining our AMENA (Americas, Middle East, Africa, Europe and North Asia) and APAC (Asia-Pacific) regions into one business unit, called Global Markets.
Global Markets brings a co-ordinated, customer-centric focus to our markets leveraging the strength of our Co-op’s sustainability, dairy innovation and science, and processing capability.
It allows us to enhance our coordination and build on the existing relationships and market know-how to provide even greater expertise and support to you, our customers.
As we all start preparing for the holiday season, I do look forward to 2023 knowing that the goodness of dairy created by our farmers will continue to provide the world with more health and climate conscious solutions.
Being both budget and climate conscious
Consumers are not only more conscious around healthier food options, but in this era of inflation, they are also more conscious of their household and lifestyle budgets. In October, we spoke to Matthew Crabbe, Regional Trends Director for Mintel Asia-Pacific about the impact of inflation led by increasing food prices the Asia-Pacific (APAC) area is currently experiencing. Matthew believes that brands should give warning of intended price rises, link price to value and focus on product quality (e.g., multiuse).
Brands need to be transparent with information proving the benefits of their products or the reasons costs are rising.
Matthew Crabbe, Regional Trends Director, Mintel Asia-Pacific
Matthew also believes that brands can also demonstrate how they are working for the common good of all, working to keep costs and prices down, maintaining quality to protect consumers, or standing up for good causes in the community.
The impact on consumer behaviour
When it comes to food, consumer reaction to inflation will vary from person to person. Some will cut back on food service spend in favour of cost-effective retail alternatives, e.g., swapping their takeaway coffee for a cheaper at-home version. Others will limit the number of purchases per week. When times are tough, food can be a source of comfort, so some food items will see an increase in retail sales.
Consumers will continue to seek comfort food, even if they opt for a smaller pack, a cheaper brand, or a fixed price.
Megan Stanton, Senior Analyst, Mintel Food & Drink2
Signal price changes to your consumers
When price rises are unavoidable, brands should to be transparent when explaining price increases and offer ways for consumers to maximise their budgets, increase food ‘yield’ and reduce wastage.
We can also look at increasing value perceptions during price rises by emphasising design, aesthetics, functionality, social responsibility, exclusivity, or adding limited editions.
The year 2022 saw a rise in the conscious consumer focusing more on self-care and immunity, sustainability, and lifestyle budgets. In February, we spoke to Roshena De Leon, Global Insights Manager for Fonterra. Roshena talks about how immunity remains top of mind with the pandemic raising concerns about whether our health is good enough to fend off viruses.
of consumers feel that it is important to eat a well-balanced diet to prevent major illnesses3
Consumer focus on immunity
In 2022, we saw a further increase in consumer interest around how food and nutrition can support a healthy immune system. Consumer demand in this space is diversifying; consumers are looking to a wider variety of ingredients like protein, vitamin C, iron and probiotics. Product development is starting to move towards different categories and targeting different consumption occasions. Looking ahead, brands should be ready to substantiate their health claims to satisfy consumers.
The growing importance of mental wellbeing
Together with the consumer focus on immunity, the importance of mental wellbeing is also growing. The link between food and non-clinical mental wellbeing related issues has become a global consideration. Putting aside clinically related mental wellbeing concerns, mental wellness in the day-to-day world can include reducing stress, promoting relaxation, restful sleep, and mental alertness and focus.
Consumers around the globe are becoming interested in or already believe that what they eat can impact their mental wellbeing just as much as it affects their physical health.
Roshena De Leon, Global Insights Manager, Fonterra
Sustainability gains momentum
In our October Perspective, Matthew Crabbe pointed out that while concern about the climate crisis continues to rise, consumers do feel increasing difficulty in prioritising sustainability in daily purchasing amid rising costs. They will look to companies to provide them with affordable, climate-friendly consumption choices and guidance. Roshena De Leon agrees that consumers are anticipated to demand greater accountability from brands to provide evidence on how they are being sustainable.
As a result of the pandemic, consumers have started to recognise how interconnected the world is. Food supply shortages have made consumers more aware of sustainable, agricultural and manufacturing practices. Technology such as digital product labelling and mobile tracking apps will be critical in promoting traceability and transparency.
Roshena De Leon also mentions that being able to trace the origin of food also provides reassurance of quality and safety for consumers. Attention around dairy’s carbon footprint has also accelerated, with consumers seeking information around farming practices, manufacturing and supply chains involved in the dairy industry. While packaging has long been the key sustainability focus for many consumers and brands, there has been a significant shift to consumers being concerned about the environmental impact of a brand’s entire supply chain. This is a key advantage for NZMP customers who have the opportunity to leverage Fonterra’s Sustainability Solutions.
Balancing the excitement of texture innovation with health claims
As consumers seek novelty, dairy players may need to balance indulgence with better-for-you options. Back in June, we spoke to Merianah McQuin-Tan, Account Director from Mintel ANZ. Merianah and her team incorporated key insights from a range of internal sources to highlight the importance of texture innovation in dairy products.
The pandemic has brought the notion of healthy living to the forefront, and food and drink products that provide added functional health benefits are being sought out by consumers, driving interest for a range of functional benefits. This suggests opportunities for new product launches that combine texture innovation with healthier living.
Texture plays a pivotal role in delivering a complete sensory experience and improving overall consumer appeal.
Merianah McQuin-Tan, Account Director, Mintel ANZ
Brands are utilising textural ingredient inclusions to boost a product’s sensory experience ranging from fruits to chocolate, biscuit pieces, and grain-based ingredients such as muesli, cereal, and granola. Consumers are more likely to be interested in textural ingredients when these enhance the corresponding flavour profile of the product.
Along with richer, thicker and creamier textures, the novelty factor of crunch or melt-in-your-mouth ingredient infusions are becoming more appealing to consumers. These playful add-on ingredients help enrich the taste and texture of dairy products such as yoghurt. Mintel data shows that Thai women consumers, particularly Gen Z aged 18-244, are the health-conscious demographic most interested in yoghurt products specifically made as a pre- or post-workout snack.
The use of natural ingredients, which often contain less sugar, fat and calories, can help dairy products hold firm on their health credentials. By incorporating natural sweeteners (e.g., honey, monk fruit, agave) and introducing no-added-sugar formulations into products, brands can create an exciting taste experience that allow consumers to enjoy dairy as a healthy treat.
During times of stress, consumers are looking for comfort from food and drink.
Merianah McQuin-Tan, Account Director, Mintel ANZ
Both Merianah McQuin-Tan and Matthew Crabbe have noticed the current trend for comfort food with Matthew pointing out in a previous issue of NZMP Perspective that we will see an increase in demand for products that are perceived by consumers as a treat. Mintel’s 2022 Global Consumer Trend Enjoyment Everywhere5, shows how dairy products can provide both comfort and functionality. Textural innovation can amplify the indulgence factor to target experimental consumers, while enhancing nutrition or health benefits can address consumers’ rising health consciousness.
Looking forward to 2023, we will retain our strong focus on developing sustainable dairy nutrition in a way that cares for people6, animals7, our environment8, and brings value to our communities9.
To read the full article, download this month's Perspective publication below.
Chief Executive Officer, Global Markets, Fonterra
Judith Swales leads Fonterra’s Global Markets region, representing NZ $764 million in EBIT for the Co-op in 2021/22. Responsible for our Consumer, Foodservice and Ingredients channels across the region, Judith and her team lead the global strategy to help bring the goodness of dairy to generations of customers and consumers with products that support every life stage. Combining over 5,300 talented employees, 83 nationalities and hundreds of cultures, Global Markets covers New Zealand, Australia, Southeast Asia, South Asia, North Asia, and the Middle East, North Africa, Europe and the Americas. Prior to this, Judith was Fonterra’s CEO for Asia Pacific, responsible for all sales and marketing of Fonterra’s Consumer, Foodservice and Ingredients products. She earlier led the Global Consumer and Foodservice business, and the Innovation and Transformation business unit. Judith joined our Co-operative in 2013 as Managing Director Australia and Fonterra Oceania, where she led the successful turnaround of the Australian business and oversaw Fonterra Brands New Zealand. The daughter of a milkman, Judith grew up helping her father on his daily milk run. Judith has a Bachelor of Science (Honours) in Microbiology and Virology and is a graduate member of the Australian Institute of Company Directors. She has extensive experience in senior management and business turnarounds. Before joining Fonterra, she was the Managing Director of Heinz Australia, and CEO and Managing Director of Goodyear Dunlop, Australia and New Zealand.
The views expressed above are the opinion of the author, not those of Fonterra, and Fonterra is not responsible for any decisions taken in reliance on the same.
- 1. https://www.nzmp.com/global/en/perspective-december-2022.html
- 2. Matthew Crabbe. (2022). The impact of inflation on APAC consumers: 2022-23. Mintel. https://clients.mintel.com/content/trend/the-impact-ofinflationon- apac-consumers-2022-23
- 3. Fonterra Health and Wellness Survey 2021
- 4. 1,000 internet users aged 18+
- 5. Mintel’s 2022 Global Consumer Trend Enjoyment Everywhere
- 6. https://view.publitas.com/fonterra/2022-sustainability-report/page/9
- 7. https://view.publitas.com/fonterra/2022-sustainability-report/page/42
- 8. https://view.publitas.com/fonterra/2022-sustainability-report/page/24
- 9. https://view.publitas.com/fonterra/2022-sustainability-report/page/46