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 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. 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.
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 discussion1.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 Zealands dairy exports to China have been increasing and now attimes make up 20% .This growth in exports appears to underpin both increaseddemand for dairy products and Fonterras 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 bigmarket.• 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 thecustomer’s demand on diary product. - After this, they determine the customer’s demand. - Next, they start make a dairy product which can satisfythe 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 ofFonterra dairy industry with San Lu Group to createvalue for the joint venture and improve their profit inChina. Especially, it shows us about the decision inmarketing its product, strategies or technics of San Luto promote successfully its products to Chinesecustomers include dairy products that they have nottraditionally been part of the Chinese diet.