Fonterra and Coca-Cola in strategic alliance to grow in Southeast Asia

ASIA – The world’s soft drinks giant, Coca-Cola and New Zealand’s dairy co-operative, Fonterra have entered into a strategic alliance to capitalize on the growing dairy and beverages market in Southeast Asia.

The companies are launching ready-to-drink beverages in the market starting with Vietnam, according to a NZ Herald report.

The partnership is looking to leverage on Fonterra’s prowess in dairy beverages even as The Coca-Cola Company looks to diversify from the declining soda sales.

Clare Morgan, marketing director for the Asean Fonterra & Coca-Cola Strategic Alliance, the alliance has launched a product in Vietnam, and this will be followed by a similar debut of other products in Indonesia and Thailand.

According to her, the products typically involve high dairy content targeting children, breakfast drinks for adults and a skincare range.

The products have been released under Coca-Cola’s Nutriboost brand, which combines milk and real fruit juice in a convenient, ready to drink format.

The alliance which consists of five members, three from Fonterra and two from Coca-Cola aims to utilize the companies’ capabilities in ready-to-drink beverages while utilizing their sales and marketing dexterity.

They are considering launching a range of products under Fonterra’s Anchor brand as well as new products in other markets across Southeast Asia, including the Philippines.

“Both Fonterra and Coca-Cola are committed to disrupting and accelerating the growth of the dairy ready-to-drink category in Southeast Asia by exciting consumers with innovative new products that offer tailored nutritional benefits,” said Judith Swales, chief operating officer of Fonterra’s global consumer and foodservice business.

“Dairy has become one of the fastest growing beverage categories in Southeast Asia.

“Demand is being driven by consumers’ increased focus on health and wellness and the category is expected to grow on average at more than 5% each year between 2016 and 2020.”

The alliance comes at a time when Fonterra is exploring a major financial review of its business after posting a US$128.5 million (NZD 196 million) loss for the 2018 financial year.

Coca-Cola on the other hand is weighing its options in the non-sugar categories even as both sugar taxes and consumer preferences for low-sugar or no sugar drinks continue to impact profits.

“We believe the value-added dairy beverage category offers a significant opportunity for growth in the region and the expanded Nutriboost range is the first step in our combined efforts with Fonterra to deliver winning new products for consumers,” said Iain McLaughlin, president of The Coca-Cola Company’s ASEAN business unit.

Last year, Fonterra formed joint venture with Indian retail giant Future Group, to make a range of consumer and food service dairy products.

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