Coca-Cola-Fonterra alliance: New Nutriboost dairy products launched in Vietnam

13-May-2019 - Last updated on 13-May-2019 at 01:33 GMT

Beverage giant Coca-Cola and New Zealand dairy major Fonterra have partnered in what has been deemed a Strategic Alliance in South East Asia, with the first range of products from this having just been launched in Vietnam under the Nutriboost brand. ©Coca-Cola/Fonterra

According to Coca-Cola/Fonterra Strategic Alliance General Manager Steve Bonz, the new Nutriboost products have been developed for various different functionality needs, for example beauty, growth and development and energy.

“We’re trying to cover as many demographics as we can,” he said to FoodNavigator-Asia.

“There are three main reasons we started in Vietnam. First is the opportunity, as Vietnam is the third largest dairy market in the ASEAN region.”

“Additionally, we had an existing brand there in Nutriboost [to build on] that already had traction, which we could launch under and not spend a whole lot more developing a new brand from scratch.

The existing Nutriboost range had already been in the Vietnamese market for some 10 years as a milk-juice fusion beverage targeting a specific stamina need for teens and young adults, but with low dairy content. The new products in the extended range all comprise 90% or more milk content.

“We also have to work through a system that includes a bottling partner in operations, [and] both the general managers of the bottler and Coca-Cola Vietnam [were very enthusiastic about] this opportunity].”

The Strategic Alliance’s Director of Marketing Clare Morgan told us that the new Nutriboost UHT milk range in Vietnam comprises three main variants, which are Nutriboost Kids, Nutriboost To-Go and Nutriboost Beauty.

Nutriboost Kids is targeted at children above three years of age, with each of its products being fortified with different occasion-based vitamins and minerals. The three product variants within this range are Morning Growth (fortified with vitamins for growth), Playtime(designed for stronger immunity) and Good Night (fortified with DHA for brain development).

Nutriboost To-Go is an energy-providing breakfast range enriched with oats and fibre, whereas Nutriboost Beauty is fortified with fitness and beauty-associated minerals like collagen and zinc.

“The Nutriboost Beauty range is targeted more towards a female audience. It contains only 100kcals per bottle, and has zero fat,” said Morgan.

Nutriboost Kids is currently already available on shelves, retailing at US$0.25 for a 110ml Tetra Brik package. The Beauty and To-Go products will be released in late May to early June, retailing at US$0.65 per 220ml bottle.

More about the Coca-Cola/Fonterra strategic alliance

“The alliance was formed with the aim to develop, produce, distribute and market value-added dairy products across the ASEAN region,” said Bonz.

Including Bonz and Morgan, the alliance team comprises five core people: two from Coca-Cola and three from Fonterra.

“It’s been a challenge with a small team so far to navigate as a start-up in between two big companies, [but] that said the co-operation on both sides has been phenomenal and we have seen tremendous support from both Fonterra and Coca-Cola,” he said.

Morgan added that this alliance was also formed based on the expertise of both companies.

“Coca-Cola’s got great distribution, strong brands, great marketing and the like, whereas Fonterra’s got over a hundred years of dairy expertise [and experience] and making sure things are processed according to [its strict standards],” she said.

The alliance’s current focus is on ready-to-drink products, according to consumer needs.

“These needs are often functional, but it could also be to meet a need for taste or flavours [in the regions],” added Bonz.

Upcoming product development

The alliance is currently conducting research in more markets in the South East Asian region, and screening different concepts in preparation for further product development.

“We are also looking at launching a new range under the Anchor brand, either late this year or early next year,” said Morgan.

“The other big markets here in ASEAN for dairy are really Thailand and Indonesia, so we’re definitely investigating those markets at the moment.”

Anchor is traditionally known in ASEAN countries for its butter and milk powder products. The new range will cover RTD dairy beverages as well, but be more focused at what Morgan deemed the ‘sensorial’ end of the market, covering more of the taste and flavours aspect that consumers seek.

“I would really like to see this concept spread quickly to other markets in the region, like Indonesia, Thailand, Philippines and so on. We’ve actually already had some inquiries from China and Singapore,” added Bonz.

“To make this big, [we’re] hoping to grow this to 40 million or 50 million cases [of products] within the next five years.”

Analyst comment

Following the announcement of the strategic alliance, GlobalData Consumer Research Analyst Shagun Sachdeva described this as a ‘key growth opportunity’ for both Coca-Cola and Fonterra.

“The rationale behind [the alliance for Coca-Cola] is as part of its strategy to evolve into a total beverage company by diversifying away from drinks with high sugar content in line with evolving consumer demand,” said Sachdeva.

“[Meanwhile,] Fonterra is scouting for joint ventures in which it does not need to inject capital [- this alliance allows it to] leverage Coca-Cola’s brand name to enhance its own product line.”

“The strategic alliance presents a key growth opportunity for [both companies] to capture the rapidly growing dairy beverage market in Southeast Asia [and] allows them to tap into consumers’ rising and diversified demands for nutrient-rich products in the region.”