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Customer-Focused Innovation Key to Future of Dairy Industry

Consumer-focused innovation is essential for the dairy industry to survive, says the General Manager research and technical operations of Fonterra’s new Marketing and Innovation group, Jeremy Hill.

“While improvements made at any stage of production from pasture to plate will add value to the dairy industry, what will ensure its long-term health are innovations based on customer need,” says Dr Hill.

Just back from addressing the International Dairy Federation’s world summit in Bruges, Belgium, Dr Hill says Fonterra’s new Marketing & Innovation division has already attracted international plaudits, with fellow conference speakers telling delegates Fonterra had set a new industry standard.

The Palmerston North-based division groups together key marketing staff and research and development (R&D) personnel. Product development happens in response to customer feedback, rather than occurring in partial isolation.

Dr Hill says the division’s structure suits the two-fold nature of the work done by Marketing & Innovation staff: “One part of our job is to come up with products that meet customers’ needs, and the new structure means those needs are communicated to product development staff much faster than before. The other thing we do, as researchers, is to analyse the raw material we get from our farmer suppliers, with a view to discovering new attributes, particularly in areas such as nutrition.”

“If Fonterra can validate these discoveries, we have the opportunity to create a demand for a product. Again, the alignment between R&D and marketing speeds this process and has already created returns for the Co-operative,” he says.

This goes hand in hand with what Dr Hill sees as an increasing trend in the dairy industry - market segmentation. He predicts consumers will increasingly demand more “functional” food - foods customised to meet the needs of an individual’s lifestyle and health requirements.

“As long as we continue meeting these customer’s needs – both realised and unrealized - the dairy industry has a bright future,” says Dr Hill.

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