Maarten van Beek heads the medical nutrition and healthy aging unit in Amsterdam and Komal Mistry-Mehta heads the sports and active lifestyle unit in Singapore.
Both businesses operate in growing global markets worth hundreds of billions of dollars already, they say.
Mistry-Mehta said her market segment is growing worldwide at 8% a year, including 20%-plus growth in Asia.
NZMP, Fonterra’s biggest division, is the giant ingredients processing and worldwide marketing operation, which in the 2018 financial year had revenue of $16.3 billion and earnings before interest and tax of $879 million.
Wickham said a third of its products are now advanced ingredients from customised milk powders to functional foods.
Fonterra’s plants have been pioneers in caseinates and milk protein concentrates.
“We have been responsible for many firsts in dairy protein, have one of the widest portfolios of dairy protein in the world and we can produce proteins of consistent quality at scale.
“We are big enough to have scale and small enough to be nimble.”
It works with multinationals through to start-ups, offering functional ingredients, research and development help and market insights.
Medical and sports protein formulations earn three to five times the margins of normal milk proteins.
And intellectual property fees and royalties are obtainable from behind tariff barriers in markets Fonterra cannot access traditionally.
Van Beek said billions of servings a year are already provided by health providers to patients and elderly people and that is not yet well understood by NZ dairy farmers.
Age demographics mean there are a billion people in the target audience now and will be 2b by 2030.
Governments in developed countries are endorsing and subsidising protein-rich food and beverage consumption.
The high-protein products are aimed at the huge issues of malnutrition, muscle-loss, cancer and diabetes.
“But often the products don’t taste good and patient compliance is low, leading to weight loss.
“With excellent work done by the Fonterra Research and Development Centre we have re-invented these products and formulated new ones that have good taste, texture and absorption.
“We have patented products by working with the big pharmaceutical and nutraceutical companies.”
Fonterra will gain from sales of advanced ingredients, royalties on the products it has developed for other companies and from some brand opportunities down the track.
NZMP has introduced the trademarked names SureStart (paediatric), SureProtein and SureLife as sub-brands for labelling and marketing, Wickham said.
Mistry-Mehta also put her marketing unit in a worldwide context of functional foods for lifestyle choices, often to counter modern afflictions like anxiety and stress, tiredness, obesity and sleeping troubles.
Protein powders are no longer the domain of weightlifters.
Health and wellness nutrition is rapidly going mainstream, with eight out of 10 consumers looking for functional benefits when snacking.
“Dairy plays a big part in what these consumers are looking for, in particular Fonterra’s expertise in proteins, probiotics and phospholipids.”
The research centre has developed a whey protein concentrate that when incorporated in a snack bar ensures the bar does not harden over time and reaches higher protein levels.
A model for such bars is now available to intending customers.
Fonterra now sells HNO01 and HNO19 probiotics in the United States as ready-to-mix beverage powders and dry supplements.
Other markets will follow as will food formats like confectionery, bars and bakery ingredients.
Customers such as Foodspring, the German targeted nutrition business of which Fonterra until recently had part-ownership, are developing and marketing new products with considerable success.
Foodspring launched dry protein ice cream kits and pioneered protein breads and brownies and makes 90% of its sales online.
“Feedback from consumers is quick and we are then able to change formulations and try new things.
“It’s a dynamic and fragmented market and we need to work with new companies from start-up,” she said.
Dairy derivatives like lactoferrin and phospholipids, previously used in baby foods, are now migrating to foods for adults and seniors.
Ready-to-drink products are expanding very quickly from 5% of the sports and active lifestyle markets historically to 20% now.
Fonterra supplies one of the biggest US ready-to-drink makers with milk protein concentrates that have consistent qualities, avoid chelation issues and have superior taste and texture.
Wickham said Fonterra is sourcing whey protein concentrate from its joint ventures in the Netherlands and the US to meet the demand for advanced ingredients from customers of the medical and sports business units.
“As demand grows we would potentially buy-in milk protein concentrates also, having first maximised the value of our NZ milk.”
