2023 Year in Review

Hello and welcome to our 2023 year in review for NZMP Perspective.

With geopolitical instability and inflation being two concerns highlighted this year,¹ we remain hopeful that we will see the implementation of strategies to reduce these tensions. Despite these turbulent times, we have had an encouraging year for the Co-op, as demand for dairy grows across the globe with consumer trends focusing on health & wellbeing and sustainability.² For NZMP™ and Fonterra, sustainability, nutrition, and innovation continue to be at the heart of our business, with the vision to help you, our customer, achieve your ambitions and meet consumer demand. 

Fonterra has been on a sustainability journey for many years now. We know we need to build a resilient Co-op for future generations while helping our customers achieve their long-term sustainability goals. We are committed to being the world's lowest-emissions, large-scale dairy supplier. Our belief is that from New Zealand's low emissions starting point, our continued improvements will make us the best choice for our customers to accelerate their journey to a net zero future.³ This year, we took a further significant step towards achieving our climate ambitions, with the release of the Fonterra Climate Roadmap and voluntary Fonterra Climate-related Disclosure 2023. 

Our Co-operative is targeting a 30% intensity reduction for on-farm emissions by 2030 from a 2018 baseline, which will further reduce the emissions profile of our products and ingredients. Achieving this target will require a combination of sharing best farming practices and technologies which we will be working with farmers to achieve. Earlier this year, we lifted our emissions reduction targets for our manufacturing and operations to a 50% reduction by 2030 (from a 2018 baseline).⁴

The Fonterra Climate Roadmap further details the path we are taking towards a net zero 2050. We believe dairy has a regenerative future and plays an important role in decreasing global malnutrition and micronutrient deficiency. This is why we must take a long-term view to ensure the sustainability of dairy farming in New Zealand. Our climate roadmap is the work of Fonterra’s sustainability, farming, and science experts, and helps you, our customer, to not only define your own sustainability ambitions, but to also make real progress towards achieving your own climate targets.

As we wind down for some rest and relaxation during the holiday season, we hope the following highlights from 2023 will provide you with some thought-provoking reading and new insights for 2024. 

Before we get into this year's highlights, watch the video below for a message from Judith Swales, Fonterra's CEO of Global Markets:

Holistic wellbeing a top consumer trend 

Total mind and body wellness is a growing trend with 9 in 10 global consumers believing that being healthy involves looking after all aspects of wellbeing, including mental health.⁵ Consumers are wanting ways to support their mental performance, sleep, cognition, and stress, without turning to prescription medicines. They are looking to address this either through supplements or in everyday food and beverage formats.⁵ In March, we spoke to Fonterra Senior Technical Engagement Manager, Rachel Marshall, who explained why nutrition is crucial for total mind and body wellness. 

There is a growing understanding among consumers that all aspects of wellbeing, including physical and mental health, are intertwined, and that nutrition is critical to setting the foundation for wellbeing beyond just physical health.⁶ Brands who formulate great tasting, convenient, functional solutions that are clinically backed with claims and clear messaging, will set themselves up for success.⁶

Unguilty pleasures

Dairy has the unique advantage of allowing consumers a permissible indulgence, which is one of Mintel’s top global food and drink trends for 2023.⁷ Following on from the holistic wellbeing trend, dairy brands can position indulgent products as key components of self-care. In May, we heard from David Faulkner, Director at Mintel Food & Drink, who explained how dairy can redefine pleasure and escapism in food and drink.

One example of a brand leveraging this permissible indulgence trend is Woolworths Ayrshire Double Cream Apple Crumble Flavoured Yoghurt with Apple & Cinnamon. This product is positioned as an indulgent treat with an emphasis on its ethical and nutritional credentials. The yoghurt boasts several claims, including being environmentally friendly with packaging made from recycled materials, providing functional nutrition that aids digestion, and being suitable for those on a halal or vegetarian diet. The yoghurt is hormone-free and contains no additional additives or preservatives.⁸

Source: Mintel GNPD

Flavour and sensory preferences collide

The 2023 consumer trend for varied cuisines provides dairy brands with countless opportunities to explore micro trends like flavour innovation, edible escapism and fusion culture.⁹ In August, we spoke to Fonterra’s Core Dairy Category Innovation Insights Lead, Nick Hall, about this rising trend for new flavours and cuisines in markets with changing tastes and preferences. 

By experimenting with unexpected flavours, textures, colours and aroma, dairy brands can create a multisensory experience for their consumers. Brands can make these experiences truly memorable by focussing on unique food and beverage combinations as well as limited edition product launches.¹⁰

While exploring new flavour sensations, consumers are also drawn to indulgent products that offer health benefits.⁹ Tying into the unguilty pleasures trend, brands can offer the perfect solution by highlighting the natural health benefits of dairy such as calcium, protein, and essential vitamins and minerals. There is also the option to fortify these dairy products to increase the nutritional benefits.

With consumers eager to broaden their culinary horizons, the sophistication of food mash-ups is trending. Consumers are finding enjoyment in showcasing their sophisticated tastes in new and unusual food and beverages.⁹ The fusion culture trend also explores aroma, texture, and virtual/technological experiences. By amplifying textures, dairy brands can provide variety and new interactions with flavours while broadening the versatility of a product.⁹

Upcycling sparks interest of conscious consumers

Sustainability has become a key factor in consumers' food and drink choices. As consumers turn to brands that provide them with climate-friendly choices,¹¹ there could be some potential in upcycling for dairy products.¹²

In the fight against food waste, this means transforming so-called "waste" into new ingredients or value-added products. In doing so, brands demonstrate a commitment to creating a sustainable and secure food supply system, resonating with eco-conscious consumers.¹²

Whey, a common by-product of cheese production, presents a valuable upcycling opportunity for dairy brands. Whey can be repurposed into other product categories, such as butter or spreads, offering a unique flavour profile with delicate, nutty notes. Buttermilk, the liquid that remains after churning butter from cultured cream, is considered a cooking ingredient in many markets. But by offering a range of flavours such as fruit and confectionery-inspired varieties, buttermilk has the potential to appeal to health-conscious younger generations seeking refreshing beverages.¹²

Looking towards 2024

Learn more about our strategy towards Net Zero 2050 below

The views expressed above are the opinion of the author, not those of Fonterra, and Fonterra is not responsible for any decisions taken in reliance on the same.