FAHC Meeting

MINUTES 19 MARCH 2019 18:00-19:30 @ FONTERRA JAPAN OFFICE

MEETING CALLED

BY Tim Barnstable (Chair)

TYPE OF MEETING General Committee Meeting

NOTE TAKERS Tomoko Inazawa ANZCCJ Intern

ATTENDEES

(ALPHABETICAL)

Attendees

Tim Barnstable – Saputo Dairy Australia

Andrew Chapman – systemsGo Corporation

Richard Griffin – New Zealand Embassy

Ichiro Kiyotomi – New Zealand Trade & Enterprise

Tom Krijnen – Australian Embassy

Craig Pettigrew – New Zealand Trade & Enterprise

Cheryl Stanilewicz – Austrade

Sally Townsend – SA Government

Judith Hanna – ANZCCJ ED

Serena Yajima – ANZCCJ OM

Guests

Carolyn Guy – New Zealand Embassy

Daiki Haruna – Tele Planning International, Inc

Namiko Matsumura – Tele Planning International, Inc

Kif Saint – Punk Doily

Matthew Schwarz – JBS Japan

Clark Uemura – Tele Planning International

Takamasa Wagatsuma – Nihon Delica Foods Association

APOLOGIES

Frank J.G. Hart – Harnet Corporation

Camiel Landheer – Custom Media

Andrew McNeil – MCNwine

Miori Tominaga – Juntendo

AGENDA 1. Fonterra’s journey in Japan, Neville Falkner and Grant Rowe

2. Q&A

1. Fonterra’s journey in Japan, Neville Falkner

The FAHC Chair Tim Barnstable introduced Neville Falkner, General Manager (Marketing and Development) at Fonterra, who has worked for the large dairy collective for 19 years including 5 years at Fonterra Japan (the rest of his time was

spent in NZ). Neville’s career and an introduction to Fonterra and its history were included in his PowerPoint presentation (to be attached later).

Fonterra is one of the top five dairy companies in the world and its contribution to New Zealand’s economy is huge, with 22,000 employees around the world and making up to

25% of NZ’s exports. There are some important market trends in Japan that Fonterra in Japan has been focusing on. This includes: The milk supply gap in domestic production, increased demand for healthy dairy products due to an increasingly aging

society, and overall higher health consciousness in the population. Due to a steady increase in dairy consumption and decrease in the number of Japanese dairy farmers,

the gap between supply and demand for dairy products in Japan is getting wider. To expand its sales in Japan and contribute to Japanese society, Fonterra has made several products that meet the Japanese population’s nutritional needs – for more

details of the Fonterra products in Japan as well as the trend in Japanese society please refer to the PPT attached (to be attached later).

Correcting consumers’ misperceptions and increasing market awareness around grass-fed versus grain-fed cows/dairy are also key things Fonterra has been working on.

They have joined expos and collaborated with government organisations and other companies as well to try and educate consumers, but there needs to be some

sensitivity to how the local market could respond if grass-fed is promoted too strongly as the healthier alternative.

Fonterra does have a retail presence in Japan – for example there are several shops selling Kapiti products open in Tokyo now and they are trying to promote the brand

here in Japan. This is an NZ iconic brand but not Fonterra’s export brand – how to expand the business to retail in Japan is an ongoing challenge for Fonterra in Japan,

but they are looking for further opportunities. One thing Neville added was that Fonterra (like other Australian and NZ companies) cannot expect the Japanese to come looking to find out who they are, saying “it’s our job to let them know about us”. See

the website for more details on where to buy this product: https://www.kapiti.jp/now-available-in-japan.html

2. Q&A

How is the promotion of the Kapiti brand in Tokyo going? Neville answered that

originally they were selling one litre products but in the Japanese market, smaller sizes are more readily sought out (house occupancy in Tokyo is around 1 person per house,

which makes it hard for one litre tubs of ice cream to sell). With the convenience store model working well in Japan (this model relies on smaller products and greater flavour variety) Fonterra thinks the 100ml cups will make the product more appealing.

However, currently the smaller format is not available for exporting. Transforming NZ’s iconic brand into an export brand isn’t easy, a lot of effort is needed and it’s a slow

process, but it will be great once achieved. The key is consumers’ awareness of what is NZ and what is Fonterra. We need to give them more exposure to NZ and Fonterra.

On in-store tasting sessions, Neville said this is important when launching a new brand in Japan which Japanese consumers know nothing about. The last attempt was not as

successful as they wanted it to be, but they are re-trialling this as a way to let more Japanese consumers know about their brand.

Difference in the amount each taste sells – feijoa and pear doesn’t sell as much since feijoa is not known well in Japan, whereas fig and manuka honey sells well.

How to change consumers’ perception? Neville commented that with the internet and other ways of getting information, more people are learning about grass-fed, and Fonterra has been receiving more enquiries about it. The difference between grass-fed

and non-grass fed is something Fonterra wants consumers to know about but other Japanese dairy farmers don’t want to spread. Educating consumers on the positive

points of grass-fed is what Fonterra has been trying to do. Fonterra provides Japanese consumers with options (“if you care about grass-fed we can support that”) but the

drive needs to come from the consumer side. Farmers leaving their land – can corporates come, buy land and do business with the

land? Neville said this is possible in theory but would not easy. It would be a lot of work to bring all the local farming communities together. Plus the land that gets

abandoned is relatively small so wide consultation would be necessary to bring multiple patches of land together to achieve economies of scale. There have been some movements to get more young people into farming as well as introduction of robotic

farming.

Meiji is now a Global Partner for Fonterra, what will this mean? Neville said it will streamline Fonterra and Meijis work across multiple markets and countries.

Does Fonterra have plans to work with smaller businesses? Neville acknowledged this benefits Fonterra with them expanding their brand presence in the Japanese market

and retail. He said that whilst it provides more exposure for consumers, there are some issues with achieving this more micro-level of collaboration with such a large dairy company, but that he wasn’t ruling this out.

3. PowerPoint (PDF version available on request)