July 19, 2017

They're drinking our cream cheese in China

Fonterra drives growth in new tea beverage channel

A surge of growth in new, modern Chinese tea houses that are whipping up an estimated 200 million dairy drinks each year has helped Fonterra grow its sales of Anchor Food Professionals cream and cream cheese to Chinese beverage outlets five-fold in just two years.

“Tea drinking is a well-engrained part of Chinese culture and there is a huge buzz in the market about these new modern tea houses. It’s exciting to see traditional customs evolving through stores focused on young consumers who want premium dairy products in their drinks,” said Grant Watson, Fonterra’s Director of Global Foodservice.

Far from your ordinary ‘cuppa’ made with a splash of milk, one of the most popular drinks on many tea café menus is a tea macchiato, made using a blend of flavoured Chinese tea with a fluffy, creamy cap of whipped cream and cream cheese.

“Drinking cream cheese probably doesn’t seem very appealing to most Kiwis! But Chinese consumers love the taste and texture combination of these creamy toppings. Our Anchor Food Professionals cream and cream cheese are popular with many outlets because they taste great and have superior stability when whipped, so the frothy cap holds its shape and doesn’t sink or split,” said Christina Zhu, President, Fonterra Greater China. 

Fonterra’s China Foodservice business is focused on driving growth in the rapidly expanding beverage channel, a relatively new area of opportunity for dairy.

“Our current sales volumes in this channel account for around 80 million drinks per year and this is growing rapidly. We can see the potential for further growth in the Chinese beverage sector – not just for cream and cream cheese but also for milk, cheese and butter which feature in the food items in these tea houses,” said Ms Zhu.

Modern Chinese tea outlets range in size from large, spacious, airy cafés to street-side kiosks for ‘grab and go’ drinks. The best known brands often have huge queues at peak times.

“At the recent opening of a new Shanghai store for one of our customers, people queued for up to two hours. Another customer operates a chain of street-side kiosks and consumes about 3,000 metric tonnes of our UHT cream every year. They had 500 outlets across China last year and are estimating to double their size by 2018.

“The growth is phenomenal and reflects the way young, affluent consumers are seeking out these premium food and beverage products and experiences. The preference for premium, natural dairy ingredients in these outlets is a great fit with what we do best, so we’re really excited about the potential,” Ms Zhu said.

 

Fact Sheet: All about Chinese Tea Macchiatos 

  • Tea macchiatos are a popular drink in modern Chinese tea houses and beverage outlets
  • Known as “奶盖茶(“nai gai cha”) in Chinese, the drink is made using a base of Chinese tea, topped with a cap of cream and cream cheese that is whipped together until it forms a light and fluffy texture
  • The flavour of the base tea drink can vary from black and green tea to more traditional Chinese varieties such as Oolong or Pu’er
  • When drinking a tea macchiato, the goal is to sip the drink at a 45 degree angle to get the ideal mix of tea and creamy topping in each mouthful
  • Tea macchiatos originated in southern China (particularly in the cities of Shenzhen and Guangzhou) and the region’s most popular tea house chains , Heytea and NESNO, are now growing nationwide
  • The average price for a tea macchiato in most Chinese outlets is NZ$4.00