Whether it's a shopper grabbing butter, not margarine, for their morning toast, or a cyclist snacking on a protein gel, attitudes to food are changing.
Those changes have been good news for Fonterra, for which proteins and fats are its stock in trade.
On the protein side, consumption is picking up among the elderly and the young.
Specialised proteins - once the preserve of tomorrow's Arnold Schwarzenegger - are making their way out of the gyms and into mainstream, everyday use, in the form of energy drinks and snack bars.
"There is a growing realisation about the value of proteins," says Kelvin Wickham, chief operating officer of NZMP - Fonterra's ingredients business.
"The stuff that was for the body builders in the gym - mainstream consumers are becoming more aware of," Wickham told the Herald.
"Now the challenge is how to put it in a form that is going to taste good and is convenient."
Product that was once confined to a jar of whey protein powder is now more likely to end up in a snack bar, in sports gel, or in drinks. It's a rapidly growing area, with Fonterra's active category - its name for sports nutrition and healthy ageing products - is now enjoying 8 to 15 per cent growth annually.
Outside the food chain, there are other weird and wacky uses for the high-end proteins that Fonterra can extract from plain milk.
For example, Maserati uses Fonterra casein to treat the leather upholstery in its sports cars, while the co-op's high value ingredients include medical grade lactose, which is used to carry medicine in more than half the world's asthma inhalers.
Fonterra's view is that demand for protein - in all its forms - is expected to grow significantly by 2050, when the world's population is expected to have swelled to 9 billion, from 7.5 billion today.
Along the way, Fonterra expects to see more emerging economies and a rising middle class, more people living in cities, heightened awareness of health and wellness, and increased need for protein - particularly for the elderly.
The pharmaceuticals segment is projected to have the highest compound annual growth in the protein ingredients market from 2017 to 2022 in terms of value.
In sports nutrition, protein is becoming universally recognised as a nutritional building block to fuel the body, build and maintain muscle, and to manage weight. That has led to a booming sports nutrition market, particularly in developed economies such as the United States.
Fat is back
On the fats side, as anyone who has been to a supermarket lately will know, butter prices have taken off.
Wickham says that price rise reflects a big change in attitudes towards the yellow stuff, particularly in the United States.
"Butter demand is showing no signs of abating," he says.
On the GlobalDairyTrade platform, butter prices have more than doubled in less than a year - from US$2687 a tonne last July to US$5775/tonne at this week's auction.
Rabobank analyst Michael Harvey says there has been a pronounced shift in consumer behaviour towards dairy.
"It's a positive for the industry," he says. "I mean, high fat products were a no-go for the industry for a long time."In the US, the decision by fast food chain McDonald's to shift back to dairy fat from vegetable oil was a key development. High fat yogurt is also gaining ground over products with a high sugar content, and full cream milk is returning to favour over skim milk.
Harvey says that part of the rise in butter prices is due to skim milk stockpiling in Europe; producers are less inclined to make skim milk, which means lower production of the by-product - butter.
"The butter story is very positive for the dairy industry," he says.
Food trends can be fickle, but Wickham says there has been a drive back to "naturalness". Today's consumers, he says, are more likely to read the list of ingredients on the pack.
Food trends can be fickle, but Wickham says there has been a drive back to "naturalness". Today's consumers, he says, are more likely to read the list of ingredients on the pack.
"Cream that is churned into butter is being seen as a better proposition than margarine, with all the various oils and processing that goes through to make it look like butter," he says.
Like the US, other big countries are moving back towards consuming more butter per capita than ever.
As well, he says there is huge demand from China for liquid cream products for baking.
The growing popularity of televised cooking shows has not done Fonterra any harm either, he says.
In protein alone, Fonterra - the world's biggest dairy exporter and milk processor - generated about US$1.3 billion in revenue in 2016.
NZMP, which represents 60 per cent of Fonterra's revenue, is responsible for more than 22 per cent of all globally traded dairy products.
Advanced ingredients - as distinct from standard commodities such as whole milk and skim milk powder - account for about 25 per cent of NZMP's sales, or the equivalent of more than 4 billion litres of milk.
NZMP looms large
About 58 per cent of Fonterra's milk goes to NZMP. Another 20 per cent is sold in various forms - mostly as whole milk powder - on the GDT platform. Consumer and food service takes the other 20 per cent or so.
Despite NZMP's sheer size, it is Fonterra's other big business - consumer and food service - that gets the attention, perhaps because of its phenomenal growth.
This part of the business takes care of Fonterra's numerous brands and also caters for the restaurant and bakery trade.
In its nine-month business update, issued in May, Fonterra said consumer and food service volumes had grown by 40 per cent compared with the same nine months the previous year.
While it might not be quite as obvious, Wickham says NZMP is making progress in terms of adding value - what Fonterra calls "turning the wheel".
The frequent complaint about Fonterra over the years has been that it still churns out too much commoditised product, and too little of the value-added stuff.
At the centre of that debate is whole milk powder - milk with the water taken out - which is still a huge part of the company's operations.
Running dry
In recent years, Fonterra has invested heavily in driers - those huge stainless steel towers that dot the landscape - to keep up with surging milk production.
Once the drying process is complete, the product is shipped offshore in special packs, which keep it fresh for 18 to 24 months.
There is a growing realisation about the value of proteins
Once it reaches its destination, customers can turn it back into milk by adding water, or convert it into a range of other products.
Milk powder has been, and will remain, a highly significant New Zealand export.
But now, as the co-op continues down its value-added path, Fonterra's future investment is likely to be focused on value-added products rather than powder.
Fonterra has already spent more than $2 billion on its powder making capacity at Darfield, in Canterbury; Lichfield (Waikato); and Pahiatua (Wairarapa).
"We invested heavily in significant assets around whole milk powder and our other core commodities two seasons back, to ensure that we had flexibility," Wickham says.
"But all the recent investments have been in the value-added products - mozzarella at Clandeboye, cream cheese expansion at Te Rapa and sliced cheese at Eltham, to name a few.
There is a growing realisation about the value of proteins.
"The aim for us is to not to need to build another whole milk powder drier," he says.
"The next investments will be in the more value-added products for consumer and food service, and the top end of our ingredients business."
Criticism of Fonterra for relying too much on whole milk powder have not fallen on deaf ears.
This year, Fonterra put 300 million litres more milk into its advanced ingredients operation from its core ingredients business - of which whole milk powder forms a major part.
"So that has been happening. It may be that it is not quite as visible, because the milk pool has been growing [until recently] every year.
"The percentage has not changed as much as we would like, but it is really starting to move now, particularly as milk growth is expected to slow down," Wickham says.
As adding value comes into sharper focus, more and more product is being shunted into the higher margin end of NZMP's business.
About 25 per cent of Fonterra's milk now goes into advanced ingredients - products that are differentiated in some way to suit a specific customer - at a comparable margin to that enjoyed by its consumer and food service business.
Looking ahead
Wickham says it is inevitable that proportionately more milk will be gobbled up by the leaps and bounds in Fonterra's consumer and food service segment.
"Consumer and food service will, in time, take a larger share of New Zealand milk without a doubt," he says.
As milk production growth in New Zealand slows, that means NZMP will need to look further afield for its milk in order to maintain its market share.
"That will lead us to look offshore to milk pools, and particularly whey pools, to complement the New Zealand range, where we want to maintain customer market share," Wickham says.
Meanwhile, whole milk powder - the old standby - still looms large for Fonterra. It makes about 1 million tonnes of whole milk powder a year out of the 3 million tonnes in NZMP's ingredients portfolio.
China - Fonterra's biggest customer by far - is the world's largest whole milk powder importer, and Fonterra represents about 70 per cent of the country's import requirements.
Wickham says there is also good growth in whole milk powder demand in east and south Asia.
"It is still fundamentally important to us."
Even so, he says the days of Fonterra building new driers are fast nearing an end.
Is Fonterra worried about synthetic milk? Photo / Dean Purcell
• Ingredients The core of the business, responsible for everyday nutrition powders such as whole milk powder, though to advanced nutritional products used in infant formula. Includes butter, cheese and specialty dairy ingredients.
• Consumer and food service Focuses on two areas: branded consumer dairy products, such as powders, yogurt, milk, butter, and cheese, which are sold in supermarkets globally; and out-of-home food service, supplying the trade with culinary creams, bakery butters and a variety of cheeses, including mozzarella.
It's milk - without the cow
Fonterra is not worried about synthetic milk - not yet.
In the latest issue of KPMG's Agribusiness Agenda, released at Fieldays last month, the international consultancy talked about alternative proteins and changing production processes.
"Fermentation has exploded as a way to create natural substances through a metabolic process," KPMG said.
In an interview with the Herald, Kelvin Wickham, chief operating officer for Fonterra's huge ingredients business, NZMP, said the emerging technology had to be taken seriously.
"It is a long way off economic commercialisation and scale, but there are people looking at, for example, synthetic milk, starting with yeast," he said.
"At the moment they all rely on genetically modified organisms to get through, so that's an issue that they will have to work through and address.
"You have to take it seriously. A lot of money has gone into it and you have to think about where things may be in your global portfolio in 10 to 20 years time."
Wickham said it was possible that synthetic dairy products could have some high end applications, such as in the pharmaceutical industry.
Perfect Day, a Silicon Valley start-up, says it has found a way to use fermentation processes as a way to create cleaner, greener and more ethical milk than traditional forms of farming, and the company is tracking to release its first products this year.
"Instead of having cows do all the work, we make our milk with a process similar to craft brewing," Perfect Day says on its website.
