Maintaining success in a competitive market

THE BIGGER the challenge, the bigger the opportunity for growth, so goes the saying. For food and beverage companies, being in step with consumer needs is a continuing test of their abilities to create, innovate, and most certainly to adapt.

Over the years, FrieslandCampina has done well in aligning its products with the trends. Much has to do with its nearly 150 years of expertise, according to Hendro Poedjono, Director, Corporate Affairs, FrieslandCampina, AMEA, during an interview with FoodPacific Manufacturing Journal. Mr. Poedjono is also a Council member of Food Industry Asia, an Executive Board member of the ASEAN Food and Beverages Alliance (AFBA), a Board of Director Europe ASEAN Business Alliance (EABA), and the President Commissioners of PT. Kievit Indonesia.

First of all, you oversee three regions – strategically important to the growth of FrieslandCampina. Can you compare and contrast these markets from the point of view of the company?

The challenges and opportunities vary not only by region, but also by country within each region. Most markets share different SKUs, recipes and packaging. However, they are guided by our overarching strategy to win in the market.

Our strategy is founded on core themes. Winning with nutrition means focusing on producing good and healthy dairy products for our consumers. Our strengths and heritage, almost 150 years of expertise, are second to none. We also control and own the whole value chain. Therefore, we stand out in the world of dairy. In China, Hong Kong and Southeast Asia, our focus is on infant & toddler nutrition. We are also developing products that contain less ingredients, but more flavour, for example with Optimel. By limiting the amount of sugar used and offering less products with unnecessary ingredients, the conscious lifestyle needs of today’s customer can be met.    

Our other theme speaks to serving the 24/7 consumer and customer. Whether it is Indonesia or the U.A.E., more people now live in cities and increasingly eat on the move and in-between meals. In addition, traditional sales channels are also changing. The supermarket today exists more for convenience. The items needed to prepare a meal can now be ordered online. This means having the right product at the right time, in the right location. We are underlining this with digital agility, attention for foodservice activities and global accounts.

Globally, more consumers are demanding sustainably produced products. For us, producing in a sustainable and transparent way is part of our plan and our purpose. On top of working towards our 2025 targets, led by the Ellen MacArthur Foundation, we also devote resources to animal welfare and biodiversity in partnership with our member farmers. Leading with sustainability is key to our business success and we continue to work with our dairy farmers to build a leading position and set the standard for a more sustainable dairy industry. 

Hendro Poedjono, Director, Corporate Affairs, FrieslandCampina, AMEA

Focusing on Southeast Asia – what are the challenges – on aspects such as formulation, regulatory, food safety, even digitisation. Counterfeiting is an issue and how is it dealt with?

Counterfeiting is an issue concerning the industry. One of the key steps we have taken is to introduce a system in relevant markets whereby consumers can look at the batch code on our IFT tins and verify them for authenticity online. This provides greater peace of mind for consumers and confidence in our products.

Digitisation has also brought about many new opportunities. Digital channels while no longer a new frontier, are constantly evolving, and moving at a speed nuanced to changing consumer habits and lifestyles. This has huge meaning for our route to market, the way we engage with our consumers and customers, and also in where we invest. 

On the regulatory side, one of the key discussions that is happening at the regional level is harmonisation. While many milestones have been achieved as a bloc, non-tariff barriers continue to be a challenge for food industry players in ASEAN-member countries. This is compounded by increased nationalism and protectionist sentiments, adding another dimension to ongoing discussions. Addressing nutrition labelling to unlock trade barriers remains an important mission for the industry. This is a shared responsibility and one we will continue working on.

What are the company’s plans in the Philippines and Indonesia specifically for dairy? 

We continue with our efforts to drive affordable nutrition in these markets. This is crucial in addressing malnutrition in the Philippines and Indonesia, which share many similarities. Also, from a global perspective, the population is expected to grow from just under 8 billion people in 2018 to approximately 10 billion by 2050. The demand for food will also continue to increase in the region.

As a dairy producer, we can play an important role in feeding the world’s population. Our products contain important nutrients, vitamins and minerals. We make our products healthier and consider it important for our products to be affordable by different income groups. Furthermore, we support programmes that inform children about a healthy lifestyle and encourage them to exercise.

Education about the goodness of milk is important for us.  We do this by developing and supporting programmes on healthy nutrition and lifestyles throughout the world, such as the Drink.Move.BeStrong programme in Asia. Our focus will continue in the promotion of sports activities, like basketball, football and badminton, in our markets as relevant.

Consumers have one thing in mind: delicious but nutritious products. Tell us about the company’s forthcoming innovations around the now popular term “healthy indulgence”.

In the past, milk was perceived as a healthy drink, but not always a delicious treat. In Asia, dairy is not a common part of local cultures. Therefore, we identify ways to incorporate dairy into different occasions of our consumers’ lives and also pay attention to our ever-expanding product portfolio. We stay focused on bringing to market nutritious and delicious products that is relevant to consumers’ lifestyles while delivering taste, texture and flavour.

Our ongoing formulation and reformulation efforts take both nutritional needs and consumer tastes into account. Depending on the market, consumer tastes vary. Their needs range from nutrition – functional, basic health, goodness of dairy – in the emerging markets to a more sensorial experience such as coffee and tea enhancement in more developed countries.

Globally, our R&D teams play an important role in all our recipes. In 2018, FrieslandCampina invested 80 million euros in its research & development activities.

You personally assume many roles in your successful career. What important lessons about the industry (whether just dairy or the entire F&B industry) have you learned moving from one role to the next?

I’ve been privileged to have held different positions in the company for over two decades. These different roles have been crucial for each successive role. The Corporate Affairs function requires a complete understanding of the entire organisation, extending to all functions, power structures, barriers, across geographies. But always with an eye on strategic goals. And this is just internal. The ability to influence and drive political will in an organisation to impact health and nutrition cannot be overestimated. 

Not just the health of consumers, keeping the function strategic has seen tangible contributions to the bottom line. However, making a commercial impact does not always mean top line contribution. Protecting the company’s license to operate, its reputation, easing regulatory and trade barriers, these intangible indicators go beyond short-term commercial value. At FrieslandCampina, this license to operate also means that we can make an impact to the planet through our ongoing efforts in sustainability.

Harnessing soft power within and beyond the organisation has served the function well and we will continue to reap the benefits in the long term.