UK | Two years after the NZ-UK Free Trade Agreement (FTA) reopened the door, Fonterra has steadily grown in a high-value market that once defined its global footprint.
After 50 years of limited access, New Zealand dairy products are back in the United Kingdom following the FTA that came into effect in June 2023.
For New Zealand dairy farmers, this agreement carried historical significance. Up until the 1970s, the UK was New Zealand's largest export market and a key revenue driver for the dairy industry.
For many in the Co-op, the UK feels like a return home. The new ‘gold standard’ agreement removes all UK tariffs on New Zealand dairy over five years, creating opportunities for growth across the Co-op's entire product range, particularly our grass-fed butter and cheese.
This FTA is one of New Zealand's most comprehensive trade agreements, enabling open market access to what was once our largest export destination, before the UK acceded to the European Union.
Despite only recently re-establishing its presence, the agreement is already showing benefits with growth across several products, including butter, cheese, AMF, protein and skim milk powder.
The UK represents a substantial opportunity as the world's second-largest importer of dairy, with strong local demand. The "Kiwi brand" holds nostalgic value among specific UK consumers who recall New Zealand dairy products from decades past.
The market appears to value qualities that align perfectly with Fonterra’s strengths, with consumers demonstrating an appreciation for quality and innovation, as evidenced by multiple wins at the International Cheese and Dairy Awards in Cheshire, England, in recent years.
Consumers also place a high importance on sustainability credentials, which appeal to their environmentally conscious mindset. High regard is also given to animal welfare standards, with Fonterra’s farming practices matching these expectations.
Fonterra's grass-fed farming credentials and sustainability practices are proving to be valuable selling points in the UK market. Despite the distance between the UK and NZ, emissions from transportation account for only one percent of the Co-op's total emissions, with the real carbon footprint benefits arising from behind-the-farm-gate practices and our production sites.
The hard work the Co-op's farmers are doing in the sustainability space has a direct impact on Fonterra’s ability to succeed in the UK market and partner with customers who value the goodness of New Zealand dairy.
Re-entering the UK market after 50 years hasn't been without challenges. Fonterra is taking a measured, strategic approach to the UK market, focusing on efficiency and simplicity while selecting the right partners and sales channels.
As the Co-op continues to re-establish its presence, the path forward is marked by promising opportunities. Access to high-value markets through comprehensive FTAs provides meaningful market optionality and resilience for Fonterra, while continuing to maximise returns for farmer owners.
