Friday, March 29, 2024

Food service finds new pathway

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A refreshed strategy for its food service business is being introduced by Fonterra to counter the disruption caused by covid-19 to eating out in restaurants and hotels.
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Food service revenue is bouncing back, especially in the number one market of China, but positioning has changed, Asia and the Pacific chief executive Judith Swales told a webinar for Fonterra shareholders.

Covid-19 has accelerated trends already apparent in the market like more home cooking, outsourcing in food preparation, more home delivery and investment in digital and contactless technologies.

“We need to ensure our products are fit for purpose in this altered environment,” global food service director Paul Harvey said.

Speaking from isolation after returning from the United States, Harvey said the early impacts of the pandemic were severe – 80% revenue losses for quick-service restaurants in China and the US were reported.

“Now recovery is happening more quickly for Fonterra than our competitors.

“We must also use this advantage to develop new solutions and services and grow our market share for when it opens up.”

Harvey and Swales say elements of the new strategy include new products, digital transformation, sustainability stories, new markets and business channels and diversification away from China.

Anchor Food Professionals are now presenting their ideas to customers using on-line forums.

Local economies will be hit hard and meals and prices might need to be repositioned for local tourism rather than overseas tourism.

Centralised cooking and greater takeway distances might dictate changes to retain the characteristics of ingredients such as stretchy mozzarella cheese, for example.

Traditional food service products like cooking cream might be repackaged in different formats to move into home cookery.

Harvey said the food service division has doubled its contribution to Fonterra’s annual earnings over the past five years.

To continue that growth it will need new customers, channels and profitable market shares.

“It is all about performance in food to remain relevant for our customers.

“We earned the right over the past five years to be the world’s leading dairy experts.

“Food service has been well-supported by the board and shareholders and we must deliver a great return on capital for the next five years.”

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