Hot drinks with dairy: Fonterra taps into “adventurous” tea and coffee market

25 Jun 2018 --- Fonterra is set to meet the demand for adventurous tea and coffee drinks around the world as changing consumer tastes are leading to a growing trend toward adding more than just milk and sugar to a hot beverage.

The New Zealand multinational dairy co-operative is tapping into demand for adventurous tea and coffee drinks.

That includes beverages made with yogurt, topped with cream cheese and mixed with cream which are growing in popularity. This has lead to Fonterra establishing a new channel within its Global Foodservice business, Beverage House.

According to Fonterra, almost 600 million cups of tea and coffee are consumed out-of-home daily in the Asia Pacific region which is 22 percent up from five years ago.

Beverage House will provide premium Anchor Food Professionals products to the growing number of modern coffee and tea houses, beverage kiosks and dessert bars.

“In Asia, consumers are moving from traditional ‘straight’ brews to drinks with dairy, as they look for a more indulgent way to enjoy their daily fix of coffee or tea,” says General Manager Marketing, Global Foodservice, Susan Cassidy. 

The trend of adding dairy to more traditional beverages started in China with the tea macchiato, which is green tea topped with a mix of cream and cream cheese.

“This trend was driven by youth and took off, with people queuing for hours to get the latest creation from their favorite tea house.”

“We moved quickly and as a result, the tea macchiato alone grew the volume of our cream and cream cheese sales by 47 percent in the first half of the 2017/18 financial year.”

Beverage House has sold more than 30,000 metric tons of product, enough to create the equivalent of more than 400 million tea macchiatos, since the start of this year. 

“Beverage House has mainly been focused on China so far, but the potential for growth in other markets is huge. We are now using what we’ve learned to look at other markets where beverages with dairy are growing in popularity.”

Beverage House sits alongside Fonterra’s existing Foodservice channels: Quick Serve Restaurants, Italian Kitchen and Asian Bakery.

“Having a standalone channel within our Foodservice business means we can be more targeted with the service we offer our beverage customers and gain a better understanding of changing consumer tastes and trends,” adds Cassidy.

“Shifting more milk, quicker, into value-added products through our Consumer and Foodservice business is a key part of Fonterra’s strategy to add more value to our farmers’ milk.”