Get an insight for the dairy market from one of the biggest dairy company in Indonesia, Fonterra.

The Dairy Market Insight

Most people might not probably too familiar with the company name, but we’re sure you know the brands such as Anlene, Anmum, Boneeto, and definitely, Anchor. You know the product, now it’s time for you to know the story behind the brand. We meet Klarisa, Marketing Director of Fonterra to understand the problem in the dairy industry, the new government policy, and about Anchor in Indonesia.

It is said that France was having butter crisis, what actually happened?

Around 2 years ago, we have butter oversupply, and the price dropped. At the time, farmers were thinking to turn the milk cows into beef, when it happened, suddenly the demand of butter went up. In addition, China didn’t consume too much dairy products, but when they were introduced to products such as whipping cream and cream cheese, in the last 2 years the demand in China skyrocketed. We have many of our products allocated for China.

Based on data, the local dairy producer can only meet 13% of the national demand. Is this good news for Fonterra?

Of course, but we also have quota limitation. The government has new regulation that’s forcing producer to prioritize local milk, it was effective since last January. The policy affected our UHT milk product. For the category, the size of the sales is roughly around 10% of our total sales.

Meanwhile, other dairy products such as butter, cheese and cream are not affected because the government see that Indonesia is not ready yet to make those products in large quantity. Our sales volume is still dominated by butter for around 50%, followed by mozzarella, thanks to the booming trend of Italian and Korean restaurants that use much mozzarella. And then in the third place, we have creams, including whipping cream, culinary extra yield, and cream cheese.

With the policy, do you have any plans to create your own farm?

Actually we already have factory in Cengkareng that produces Anlene, Anmum, and Boneetounder the name Fonterra Brand Manufacturing Indonesia (FBMI). We are workingtogether with local cooperation in Padang. The cooperation is more to educatingthe farmers how to do proper milk cow farming, what sort of products can bemade out of milk, and where to sell the milk.

How do you anticipate the rapid growth of online sales platform?

We start to get into online market, however we have problem because some of our dairy products require transportation infrastructure equipped with chiller and freezer, the e-commerce websites don’t have that, yet. The products that can be sold online are the one that can be stored in room temperature, like our easy to grate cheddar cheese and tin butter.

How big is Anchor as a company in New Zealand?

Anchor is a corporation that gathers milk from farmers in New Zealand. It happens that we are the biggest dairy company there. From the milk, we produce those milk derivative products such as cheese, UHT milk, milk powder, whipping cream and  cream cheese.

What is Anchor’s primary quality?

Our cows are not kept in barns and then fed. Our concept is free range cows which are to enjoy green grass as they’d like. The grass fed cows is good at producing milk with high beta carotene content, thus we don’t need vitamin fortification like the other brands do, if you see it, out product tend to have deeper yellow hue. The additives in our product is usually salt for the salted butter, if we have other additives, the quantity is very minimal.

Who’s your biggest market in Indonesia?

Bakeries. If you get into any bakeries, everyone knows what is Anchor. But they didn’t know us as our name Anchor (eng-ker), but as An-chor. Any areas in Indonesia, that’s how they call us, a bit funny actually.

As the more expensive product, the one that use our butter is bakeries that sells the product above Rp 9.0000/pcs. Some bakeries even use our butter and sell it for Rp 5.000, but most of the times, the blend our butter with margarine. If you see the COGS (Cost of Goods Sold), the product made with butter would be around Rp 3.000. Meanwhile, the butter content in bread is only around 10-15%, it’s not that significant, compared to, let say, flour.

In terms of health, which one is better: butter or margarine?

I see it this way, butter is actually overmixed milk, meanwhile margarine is palm oil that is chemically processed. When it becomes frying oil, to me it’s still okay because it didn’t require long processes, but when it’s made into margarine, there’s stearin separation and the addition of chemicals to make it solid, because naturally, palm oil should be liquid.

Meanwhile for butter, if you overmix the whipping cream, just let it continue and the cream will separate and you’ll have butter. So in my view, butter is more natural as it doesn’t require chemical process.

There’s tendency in pastry world to switch to healthy product, will it affect the dairy companies?

Actually, dairy products are already healthy, it’s up to us how to cook it. Anything excessive is not good. However, our bones need calcium, and the natural calcium is abundant in milk.

What’s the biggest challenge to maintain Fonterra’s growth?

Probably from the competition, because our selling price is higher than margarine. Butter price depends on the very fluctuating Butter Commercial Price (BCP), we tend to follow our selling price with the BCP.

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