Paññāsāstra University of

Cambodia

Case Study: Milk Anyone?

• Background of Fonterra & San Lu group

Activities of discussion

•The level of export of milk from NZ to China

•The expansion of milk production in China impact on the dairy industry’s exports to China

•How they marketing its product to customers

•The benefits they market to customers

Background of San Lu group: In China

Found 1995 Products Milk, baby milk, powdered milk San Lu Group was a state-owned Chinese

dairy products company based in Shijiazhuang, the capital city of Hebei Province.

Background of Fonterra company: From New Zealand

Found 2001

Products Milk, butter, chees, and ice-cream

Famous company in the world for industry of milk

Responsible for approximately 30% of the world’s

diary exports.

Fonterra is increasing its activities in China company by joint venture partner San Lu, and establishing a daily milking up to 3000 cows and own 43 per cent of San Lu group - a major Chinese dairy market player - cost US$107 million this year. This initiative is aimed at supplying more quality milk, and boosting returns from the business. The expansion of the dairy market in China is expected to go from 22 billion liters a year to 40 billion liters a year in the next years.

Activities for discussion

1.Do a web search to determine the level of export of milk from New Zealand to China. How will the expansion of milk production in China impact in the dairy industry’s exports to China?

2.Dairy products have not traditionally been part of the Chinese diet. Find out how San Lu is marketing its products to Chinese customers. What benefits do they market in order to alter Chinese traditional diet to include dairy products?

• China is now Fonterra’s largest market. At about 5 percent, Fonterra’s share of total Chinese diary product consumption.

• Fonterra’s farm in He Bei province, have increasing from 3000 to 7200 cows.

New Zealand's dairy exports to China have been increasing and now at times make up 20% .This growth in exports appears to underpin both increased demand for dairy products and Fonterra's growth strategy.

• The number of selling dairy export product in China will be decrease.

• There will be less dairy product export to China.

• The profit from selling its export dairy product might also decrease.

• The export dairy product will lost their huge market.

- Ex : If the milk production In China increase then, the dairy industry’s export to China might the big market.

• The market door for dairy export will getting narrow.

San Lu strategy on marketing its product to Chinese customers.

- First, they do the market research to find out what the customer’s demand on diary product.

- After this, they determine the customer’s demand.

- Next, they start make a dairy product which can satisfy the customer’s demand.

• San Lu understands the potential of Fonterra’s brand on Chinese customers.

• San Lu decided to joint venture with Fonterra to get more attention from the customers.

• Both companies intend to supply the quality milk to the customer.

Fonterra and San Lu’s mission is to provide a high quality milk to the customer.

Through the advertisement, San Lu had marketed its product by giving the information about the advantages of milk product :

- Non-fat milk - Protein, Calcium, Vitamin A D B12 - Make the bone getting stronger - Getting higher - Make the babies growth faster, smarter

This case study illustrates us about activities of Fonterra dairy industry with San Lu Group to create value for the joint venture and improve their profit in China. Especially, it shows us about the decision in marketing its product, strategies or technics of San Lu to promote successfully its products to Chinese customers include dairy products that they have not traditionally been part of the Chinese diet.

References

Thank You for

Paying

Attention!