“Our ingredients, consumer, and food service businesses are all performing very well and are on track, even though lower milk collection means that our sale volumes are down on last year and like New Zealand, we’re dealing with cost pressures right across our supply chain.”
The co-op had good momentum in ingredients, as customers sought supply security for high-value protein, he said.
“Our consumer business remains the number one branded player in the cheese and chilled spreads categories and our food service business is back on track after the challenges of Covid.”
One player in the cheese sector would be familiar to Kiwis, Dedoncker said.
“New Zealand’s Mainland is the number one cheese snacking brand in Australia – where one Mainland snack is consumed every 45 seconds.”
To put this into perspective, the retail cheese category in Australia was worth over $2.6 billion each year and snacking accounted for 10 per cent of this revenue, he said.
“Not only is it a high-value segment, but it’s also one that punches above its weight when it comes to dollars per kilogram.”
That didn’t mean the Aussies weren’t holding their own though, Dedoncker said.
“With each of our consumer brands - that’s Western Star, Bega, Mainland and Perfect Italiano - holding number one positions in their categories and holding value share – Australia will continue to play a key role in delivering on the co-op’s consumer strategy.”
This was good news, as it had been a tough season for Australian farmers, he said.
In October farmers in Victoria and Tasmania faced devastating floods, just when milk production was stabilising after Australia’s droughts a few years earlier, Dedoncker said.
The impacts from these floods were still being felt, particularly in Northern Victoria, he said.
“It’s the wettest spring on record in Victoria and it’s the second wettest spring right across Australia.
“It means seasonal production’s down 6.5 per cent on last year.”
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The wet weather made it difficult for farmers to grow and produce their own feed, and this, coupled with high input costs for power, fertiliser and feed, had led to a challenging season, he said.
Luckily Fonterra was behind the scenes, helping farmer shareholders through the tough times.
“As the competition for milk continues to heat up, we’re doing a power of work behind the farm gate with our farmer suppliers, to provide additional on-farm support, including increasing milk production, improving pasture and providing pathways to farm ownership, and these are areas which help grow our farmer suppliers’ businesses, and build on our partnership with them.”
Dedoncker said all this hard work made the Q1 success even more satisfying.
“So, all ‘round it’s great recognition for our teams who have all worked together to keep the milk flowing through our factories and our business running under some pretty challenging conditions.”
