We'll create a separate brand as standalone, says Lukas Paravicini of Fonterra

After breaking ties with Britannia in 2009, global dairy nutrition brand Fonterra has set its eyes on the Rs 5 lakh crore (as per Edelweiss Securities) Indian dairy market once again. The company sells dairy products under brands like Anchor, Fernleaf, Perfect Italiano, Mainland, Anmum, Anlene to name a few. It has also partnered with Future Consumer Ltd to produce a range of India-specific consumer and foodservice dairy products to cater to the growing demand for high-quality dairy nutrition. Lukas Paravicini, chief operating officer - Global Consumer and Foodservice, Fonterra Co-operative Group Ltd shares future outlook with Ashish K Tiwari.

Can you briefly tell us about the exact nature of the association with Future Consumer and brand/product roll-out plan?

The equal joint venture (JV) is an exclusive focus on the dairy industry and will involve everything from sourcing, manufacturing and commercialisation of our products. We are taking a very progressive approach to rollout this partnership in India. Understanding the consumer is the first step towards identifying the products that we can deliver using Future Group's retail and logistics infrastructure. Then we will start looking at how we produce. That will be the key because you cannot look at just one side but the entire value chain. We will still look at local manufacturers to work with closely to deliver those products until we reach a scale that will require us to invest. ourselves.

You're looking at innovative, India-specific products. Where are you setting up research and development (R&D) facility for the same?

We will provide services of R&D. In fact, we have a large R&D centre in New Zealand with 400 researchers. We will also set up a research facility in Delhi to leverage our knowledge, understanding, process, technology and know-how to develop products especially keeping in mind the requirements of Indian consumers. Once we have the consumer insight, the JV will have full access to that R&D facility and will use it for product development. We have invested 10 million New Zealand dollars over the last 10 years on research globally and will be investing another two million New Zealand dollars for the research centre here in India.

Will the existing Fonterra family brands be introduced in the India market or you will create new brands here?

We will probably have a mixture of both. We are quite a different multinational company when it comes to the way we expand our brands. We want to first understand what the consumer wants and then create a brand that they identify with. While some of the products we introduce will be under existing brands there will also be specific Indian brands that we will create with Future Consumer.

We have three global brands viz Anchor (everyday dairy product), Anlene (milk product designed with a combination of nutrients to support bones, joints and muscles) and Anmum (nutritional milk products for mothers and their young children), and then we have over 50 other brands. So some of these brands could be brought to India but at this stage, we are looking at what really resonates best with the Indian consumer and create a separate brand as standalone or under the banner of our global brands.

You took 10 years to re-enter India, what are the learnings in this period for your second innings?

A decade ago, the consumer was very much focussed on traditional products. That has evolved and the market has changed drastically. The logistics infrastructure/chilled distribution was not so strong compared to what it is at present. You also have large modern retail chains like Future Group providing effective market reach. The consumers have significantly opened up to packaged dairy products made outside home owing to changing lifestyles. We have also spent a lot of time finding the right partners with similar skill sets, values etc.

We saw Danone exit the dairy business earlier the year. Is India still an attractive market or a very challenging one for global brands?

I would say both. We are very clear that India is a hugely attractive market and for us, we have no business here as yet. Any business we do here going forward will be interesting and incremental. We are looking at that youth consumer and not necessarily replicating dairy 1.0 version but targeting the 2.0 version. Having said that, India is a complex market. It's multiple nations in one big nation. While existing competitors are very strong, our partners will help to understand that you must have the sourcing capability and not just niche products. Some of our competitors might have tried to bring their global brands and replicate it here, we don't believe that will work in India.