A Review of Fonterra Group’s Strategy and Business Model

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Fonterra Co-operative Group Fonterra was formed in the October 2001 merger of the New Zealand Dairy Group (NZDG), Kiwi Cooperative Dairies, and the New Zealand Dairy Board (NZDB). It has become the world’s leading exporter of dairy products, responsible for over a third of international dairy trade. The Group is co-operatively owned by over 10,500 dairy farmers whose products make their way to customers in approximately 140 countries. Fonterra aims for global dairy leadership and its purpose is to sell their farmer shareholders’ milk (Fonterra Co-operative Group, 2011). Analysis of the Dairy Industry using Porter’s Five Forces Porter 's first force describes the threat of potential entrants. Barriers to entry and economies of scale…show more content…
This is working alongside with the enhanced use of rails to move products around the country. Then elsewhere, the Group has also taken its development online with the launch of globalDairyTrade (gDT), an internet-based auction platform through which sellers offer to sell commodity dairy products (Q&As: globalDairyTrade Information Portal, 2011). In 2010 gDT has sold 359,000 metric tonnes on the platform (Fonterra Co-operative Group, 2010). Fonterra’s second strategic goal is to build trusted brands in chosen markets. Fonterra has a strategy to strengthen their positions in key regional markets where ownership of the supply chain gives a degree of competitive advantage (Fonterra Co-operative Group, 2010). The focus has been on high growth markets within Asia/Africa/Middle East (Asia/AME) and Latin America, and the existing strong market franchises in ANZ. Anlene provides a great insight to Fonterra’s brand strategy at work. Created in Asia in 1991 to support bone health, Anlene is now the clear number one high-calcium milk brand across Asia. Priced at 30-50% above regular milks, Anlene is a trusted premium brand in the Asia market, which has an expanding middle class that is caring more about healthy nutrition for the whole family (Fonterra Co-operative Group, 2010). Additionally, Fonterra has

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