Fonterra Ingredients

Fonterra has combined scientific expertise with smart marketing to develop a very high value whey protein that has had rapid success in Japan and is now attracting the attention of some of the world’s biggest beverage companies.

NZMP 8899, as the superior whey protein isolate is known, achieves a substantial price premium over standard whey proteins, says Nigel Little, Fonterra Ingredients Manager New Options. It was developed and commercialised by Fonterra Ingredients’ scientists in Palmerston North and Hautapu and is made at its Lichfield site in the Southern Waikato.
 
“A key role of Fonterra Ingredients,” explains Mr Little, “is to commercialise a stable of value add products. We take a glass of milk and work out how we can maximise the total return we get for that glass of milk - over and above the commodity value of its constituent parts.

“Dairy protein functionality is an area where we are recognised as a world leader by global food and beverage companies. We have one of the biggest dedicated dairy research facilities in the world, and years of experience and knowledge.”

Until the 1980s, whey was simply a waste by-product from cheese. Mr Little says New Zealand was the forerunner in concentrating this waste stream into whey proteins, which from a nutritional point of view are one of the best protein sources of any food source.

Until NZMP 8899 came along, whey proteins were mainly used in applications such as nutritional sports drinks and infant formulas. Scientists at the Palmerston North Research facility (then known as the NZ Dairy Research Institute) wanted to see if they could develop a version that would command a premium price by virtue of its translucency and neutral taste.

After years of experimentation, Fonterra successfully commercialised NZMP 8899 in 2003. It is crystal clear and clean flavoured – something that was novel at that time. Whey proteins are typically cloudy or milky and with a flavour the Japanese describe as ‘animal’ or ‘wet wool’.
 
Fonterra initially marketed the crystal clear protein in the traditional whey protein markets in Europe and North America targeting niche sports beverage companies. But they achieved only modest success, not sufficient quantities to attract the returns they were looking for from this superior product.

“This was mainly because the price was considered a hurdle,” explains Mr Little. “Our consumer research revealed that high end sports nutrition consumers in Europe and North America didn’t value the translucency or taste aspect and didn’t want to pay a big premium for consumer products with these attributes – they consume whey protein because they know they have to, not for any feeling of refreshment or a great taste experience.”

Fonterra changed its focus to Japan, a market where consumers value an image of purity and where the flavour and texture experience of food is critical.

Mr Little says one of Fonterra Ingredients’ key strengths is that they are a solutions provider and not just a product supplier.

“Often our food and beverage manufacturing clients don’t have the capability or the knowledge to utilise our products. We work with other vendors and parties to put together a solution for them to help bring those products to market.”

This was the approach they took with NZMP 8899 in Japan.

“We firstly mounted a major marketing campaign aimed at potential clients. We then got the assistance of a Japanese beverage contract manufacturer to produce sample product concepts, which enabled us to show clients a clear path to commercialisation.”
 
One large sports nutrition company went on to develop three products using the functionality of NZMP 8899 - a powered beverage, a protein gel, and a ready to drink beverage under a premier sports brand that they were wanting to move towards a more mainstream market – targeting not only adult males but also adult females and children.

“They launched the first product in the third quarter of last year and sales in the first two months were well above their expectation – so good that they brought the launch of their ready to drink beverage forward by a few months.”

The Japanese company now wants to take all the NZMP 8899 protein Fonterra can produce. To meet this demand and expected demand from other clients, Fonterra is planning to increase production of NZMP 8899 fourfold over the coming year.

“Our Japanese customer has also approached us requesting a closer collaborative relationship,” says Mr Little, “something that is vital to our strategy of developing customer partnerships with leading global food and beverage companies.”  The customer is now working with Fonterra to help them to develop the next generation of clear protein ingredients.

Mr Little says the success of NZMP 8899 in a mainstream sports application in Japan has encouraged Fonterra to relaunch its clear protein beverage propositions in the United States and Europe, targeting mainstream energy/sports drinks and functional waters – markets he says are many times bigger than the niche protein sports beverage market that Fonterra was originally targeting.

Contact: Nigel Little, Manager of New Options, Fonterra Ingredients, phone 09 374 9564, email Nigel.little@fonterra.com