Freedom Foods Group has attributed soaring product sales in China over the past year to a unique business model that sets it apart from its multinational competitors.
The company, which made a name for itself manufacturing UHT dairy alternatives and free-from breakfast cereals, has made an aggressive expansion into China over the past 16 months off the back of significant investment in a new UHT dairy plant in Shepparton Victoria and an oat based manufacturing site in Dandenong.
Unlike many of its competitors, Freedom Foods Group is in the unique position where it can drive both branded and co-manufacture opportunities, according to the company's general manager of marketing & innovation, Tom Dusseldorp.
“A lot of the major food corporations own brands which are their number one priority, which is very limiting from a growth opportunity perspective, especially when moving overseas with a domestic market in decline” says Dusseldorp, who will be revealing more on Freedom's strategy at our upcoming Breaking Boundaries forum on August 4.
“We had no restrictions when we went to China to talk to the big companies there. We went into the market with a clear objective of championing Australian food and beverages first, knowing we had a best in class manufacturing platform behind us and a suite of great brands.”
Another differentiating factor, Dusseldorp says, is that Freedom Foods Group is one of the only companies in its categories investing significantly in capital equipment.
“In contrast to many other big food companies which are taking manufacturing offshore, Freedom Foods Group has made some major investments in infrastructure in Australia, and by exporting to China, we have been able to leverage that investment,” he says.
Freedom Foods recently built an $80 million UHT dairy facility, for instance, and on the back of this, it recently partnered with International Dairy Products (IDP) to launch the new Love’ in Farm (LiF) UHT range in Vietnam.
The company also extended its relationship with Chinese imported food and beverage brand distributor, Pinlive Foods, beyond UHT milk to include more of Freedom Foods' dairy and cereal products.
Given the global demand and opportunity for Australian produce, Dusseldorp says, the move to export was inevitable.
The overseas charge has also kick-started a fast-paced NPD strategy. Freedom Foods launched more than 20 new products last year alone, according to Dusseldorp.
“One of our main challenges was resource. It took time, but we now have a fully resourced R&D team constantly innovating new and exciting food and beverage products in a short space of time,” he says.
“China is driven by speed and quality, and perfect execution. It's a very regulated market, and there's not a lot of room for error.
“We also had to build our understanding of local tastes and textures. Other markets have a totally different palate, and some consumers don't even know how we eat cereal. Instead of eating in a bowl with milk and a spoon, for instance, they cook it, add eggs and noodles.
“You need to forget the way western cultures consume food and drink and that was a key learning for us through this launch period. We definitely made some mistakes and needed to adapt quickly.” Dusseldorp says.
When Freedom Foods initiated its export strategy in 2014, it at first launched products in collaboration with China's big dairy companies under their brands and it continues to drive this market today.
“That was the first big wave was before my time and was led by our entrepreneurial management team and a very supportive board – the team led the charge and started at the ground floor working with the biggest players in the Chinese dairy market.
“You have to start somewhere, and starting can often be the biggest barrier for businesses looking to export markets. Without clear leadership at that time and a board with deep roots in the Australian farming industry, the export move may have never happened,” Dusseldorp says.
“The next big step happened when other import milk sources flooded China. That put a lot of pressure on the industry," he says.
“We began to investigate other routes and other markets quickly. Milk supply can be a cyclical industry so there was no doubt it would stabilise, but this only emboldened our business and made it clear that we must expand our offering leveraging a world class manufacturing asset.”
According to Dusseldorp, this was when e-commerce started to emerge as a key opportunity for growth in China, and it was here that Freedom Foods' own brands found a channel where they could flourish.
“We have since discovered that online offers far more direct access to Chinese consumers, who see food security as one of their major food purchasing decisions, and who are engaged and excited about the food and beverage products they buy, especially from overseas.
“Australia is in the top five, and this is what we continue to drive today with further opportunities for our branded and co-manufacture growth in China."
Dusseldorp will share Freedom Foods' export journey and learnings at the Breaking Boundaries forum on the 4th August 2016 at Royal Randwick Racecourse, Sydney. Register here.
