Kamal Gupta is the managing director of Fonterra in the Middle East, Africa and Commonwealth of Independent States (CIS). Never heard of Fonterra? It's New Zealand's biggest company and makes many of the dairy products you are likely to consume:
You sell the Anchor butter brand worldwide, but the Fonterra name is not well known. So can you tell us a bit about the business?
Well, we're the biggest company in New Zealand. Our revenues are equal to between 10 and 15 per cent of the country's GDP and about a quarter of the country's exports come from Fonterra. Given our size as a dairy company, we trade in about 40 per cent of dairy commodity trading worldwide.
What is the ownership structure?
We are owned by 13,000 farmers in New Zealand as a co-operative. The farmer's share in the company is in proportion to the milk they provide.
Do you export milk to the Middle East?
As New Zealand is so far away, it is not possible to bring the liquid milk, so the company converts this into solid products such as milk powder, cheese and butter. We also bring in ingredients such as milk protein concentrates, which we then use in our factory in [Saudi Arabia] to convert into cheeses such as feta.
So the Anchor butter on our sandwiches comes all the way from New Zealand?
It comes straight from New Zealand, exported direct to the UAE. We supply butter to all the GCC markets. We also directly import our Chesdale brand, the individual slices used in burgers. They are directly manufactured in New Zealand and exported to the customers here.
How do you get the product here?
The way we operate in the Middle East is that we have distributors in each market. Depending on which product we are selling them, the products generally go in a full container to the distributor on a ship. We might pay the freight costs or it is incorporated in the deal.
How big is the dairy market in the Middle East?
Last year we saw sales of about US$200 million (Dh734.5m) and expect double-digit growth this year in the region, compared with single digits globally. The market is fragmented because there are a lot products that come from Europe. But we are the number one supplier to the food service industry. We supply all sectors from hotels to restaurants, which includes casual and fine dining.
You mentioned commodity trading. What does that entail?
About one third of the company's sales come from converting our dairy products into our own consumer brands. The other two thirds comes from selling our products on a wholesale basis.
Does that mean your dairy products could be in any number of brands?
Yes, if you go round the shelves and see milk powder in the ingredients for something, it will probably be from Fonterra.
