Fonterra Low Carb-yoghurt Cashes in on US Diet Trends

Fonterra has developed a low - carbohydrate yoghurt that cashes in on the latest US Atkins and South Beach diet trends.

The yoghurt, which has 70 percent less carbohydrate than standard yoghurt, was developed by Fonterra specialty ingredients businesses Fresh Dairy Solutions in Mexico, and DairiConcepts. DairiConcepts is a Fonterra joint venture with Dairy Farmers of America (DFA), combining DFA’s manufacturing sites with Fonterra’s technological innovations and advanced research and development capabilities.

US researchers estimate more than 17 percent of American households are following a low-carbohydrate diet regime such as the Atkins or South Beach diets.

Last September, Fonterra approached yoghurt manufacturers with concept samples of yoghurt based on a dried milk protein manufactured at DairiConcepts’ Portales plant in New Mexico.

Fresh Dairy Solutions sales manager Kim Ballinger says these companies immediately saw the low – carb yoghurt’s potential and began carrying out their own manufacturing trials, using processing and formulation information from Fonterra.

Within five months of presenting the concept to potential customers, the Portales plant had received its first large-scale order for the protein ingredient.

“It’s a great example of how developing business solutions for our customers helps us develop our own business,” says Kim.

“Yoghurt is one of the fastest-growing dairy categories in the US. Before we launched this innovation, our business with yoghurt manufacturers was fairly limited.

“Now they are starting to regard us as value-adding partners, rather than just commodity ingredients suppliers and we have already started work on more projects with them.”

Development of the low - carb application is a good example of the kind of solutions Fonterra is providing to customers, says Fresh Dairy Solutions General Manager Robert Le Brun.

These range from technical innovations to improve such things as product shelf life or to reduce manufacturing costs, development of innovative products – like the low-carb yoghurt - to capitalise on consumer trends, or solving a specific processing problem.

“In the past, we have been driven mainly by finding ways to sell more New-Zealand sourced ingredients. Now our focus is much more about leading in providing fresh dairy solutions for the world’s main players. Increasingly, Fonterra is seen globally as a value-adding partner.”

Fonterra’s major customers, faced with the challenges of the global economy, retail consolidation and higher commodity prices, are looking for lower costs, pricing stability, consistency of product and innovation, says DairiConcepts President Jeff Miyake.

“We’ve developed quite a reputation over a short period of time that we can deliver and because we’re providing a unique solution this is what’s differentiating us from the competition. We may not sell as much quantity – wise as we would with commodities, but we sell something with a higher margin.”

DairiConcepts, based in Missouri, is a leading provider to the US market of high-end, dried cheese powders for use in specialty snack and prepared foods, while the Portales plant is the only A-grade manufacturer of milk protein concentrate in the world.

“We are not just your typical supplier. We’re coming in with solutions which other suppliers are not even offering. That’s what makes them want to come to us,” says Mr Miyake.

“They see us providing new opportunities for them – driving out costs and providing innovation – and these are the two key points. Right now, it’s a combination of perceived technology and innovation and our relationships with our customers.”

Fresh Dairy Solutions and DairiConcepts are two of Fonterra’s five Ingredient Growth Businesses, which also include Health and Nutrition, Pharmaceutical Lactose and Specialty Milks (including organics).

Together, they are achieving growth rates of 12 per cent, generating more than $500 million in revenues fro Fonterra in the last financial year and providing a solid platform for the co-operative’s Ingredients value-add business.

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