WEBVTT - Beyond milk: Fonterra's next frontier 0:00:00.240 --> 0:00:02.320 It's no secret that we went through some pretty tough 0:00:02.360 --> 0:00:05.280 times to go back to twenty seventeen eighteen nineteen, and 0:00:05.320 --> 0:00:06.760 we had to sort of do things differently. 0:00:06.800 --> 0:00:08.280 And we've talked a bit about that. 0:00:08.640 --> 0:00:11.600 Ninety five percent her business is exportant and always has been. 0:00:12.240 --> 0:00:13.880 And you know, there wouldn't be a day go by 0:00:13.960 --> 0:00:15.680 where we don't have some of you we're dealing with 0:00:15.720 --> 0:00:17.560 in some corner of the world somewhere. And what does 0:00:17.560 --> 0:00:21.400 that breakthrough teenology is what is the next you know, protein, 0:00:21.560 --> 0:00:23.560 amino mascid that is this, and milk that we haven't 0:00:23.600 --> 0:00:24.200 yet developed. 0:00:27.840 --> 0:00:30.520 Jodore, Welcome to Shed Lunch, brought to you by Chasy's. 0:00:30.680 --> 0:00:33.400 I'm Helen Madison. Today we look at one of New 0:00:33.479 --> 0:00:37.239 Zealand's largest companies, Dairy co Op Fonterra, and in a 0:00:37.280 --> 0:00:41.000 moment I'll be going upstairs to speak with CEO Miles Huddle. 0:00:41.400 --> 0:00:44.120 But before we get started, here's some important. 0:00:43.720 --> 0:00:47.000 Information investing and involves the risk you might lose the 0:00:47.040 --> 0:00:49.760 money you start with. We recommend talking to a licensed 0:00:49.760 --> 0:00:54.240 financial advisor. We also recommend breeding product disclosure documents before 0:00:54.280 --> 0:00:57.040 deciding to invest. Everything you're about to see and here 0:00:57.320 --> 0:00:58.680 is current at the time of Recording. 0:00:58.720 --> 0:01:01.400 Welcome Miles, thank you for having us at HQ here 0:01:01.600 --> 0:01:02.840 with Fontier and Auckland. 0:01:03.040 --> 0:01:03.920 Please are nice to have you here. 0:01:03.960 --> 0:01:04.200 Helen. 0:01:04.280 --> 0:01:06.800 Let's start at the beginning. I know you've been with 0:01:06.880 --> 0:01:09.800 Fontierra I think nearly twenty five years, is that right. 0:01:09.760 --> 0:01:11.080 November six, two thousand. 0:01:11.160 --> 0:01:13.120 Now you've had a number of roles, it would be 0:01:13.120 --> 0:01:15.960 fair to say in that time, which you'd expect. I 0:01:16.000 --> 0:01:18.640 think you've even been in Russia and Africa, all sorts 0:01:18.640 --> 0:01:21.520 of exotic places. Tell us a little bit about that 0:01:21.680 --> 0:01:24.960 journey to where you are today, and twenty eighteen is 0:01:25.000 --> 0:01:25.920 when you took the helm. 0:01:26.800 --> 0:01:27.880 Yeah, what's been varied? 0:01:28.080 --> 0:01:30.880 As you say, I've lived in a few places around 0:01:30.880 --> 0:01:36.440 the globe, heap of experience and exciting times. A few 0:01:36.480 --> 0:01:39.600 times that I remember fondly that have been a bit 0:01:39.640 --> 0:01:41.480 hairy at times as well, when you're get into some 0:01:41.520 --> 0:01:44.800 places that you may not wish to be in it again. 0:01:44.880 --> 0:01:48.320 But that said, you know that the experience that's given 0:01:48.360 --> 0:01:51.320 me been offshore with our customers, some of our key customers, 0:01:51.320 --> 0:01:54.280 some of our key markets, has been invaluable for me. 0:01:54.360 --> 0:01:57.680 Coming back to New Zealand in twenty fourteen and was 0:01:57.720 --> 0:01:59.560 fortunate enough to sort of lead up the farm Sohols 0:01:59.560 --> 0:02:03.680 business it was, and getting close engaged with the farmer 0:02:03.720 --> 0:02:06.600 shareholders and ultimately given me the opportunity, I think in 0:02:06.600 --> 0:02:08.720 twenty eighteen to step into this role. So yeah, I 0:02:08.720 --> 0:02:11.799 mean it's been at a great career, as I say, 0:02:11.919 --> 0:02:14.280 as you say, twenty five years come this November. 0:02:15.760 --> 0:02:18.239 So if we go back even further, were you brought 0:02:18.320 --> 0:02:20.320 up on a farm or did you have an inkling 0:02:20.320 --> 0:02:22.680 that you would be the CEO of Fterira one day? 0:02:23.440 --> 0:02:24.000 Far from it? 0:02:24.080 --> 0:02:26.360 No, I certainly wasn't born up in rural New Zealand. 0:02:26.360 --> 0:02:30.919 I was brought up in christ Church and got introduced 0:02:30.919 --> 0:02:33.320 to the dairy industry as I say, sort of late 0:02:33.440 --> 0:02:36.320 nineties and moved across in the year two thousand so, 0:02:37.040 --> 0:02:40.400 and my involvement with farming at that point was limited 0:02:40.440 --> 0:02:42.520 to the role you should expect in a corporate role 0:02:42.560 --> 0:02:45.280 within the dairy industry. And it wasn't, as I said, 0:02:45.320 --> 0:02:47.760 until twenty fourteen where I got back and was heavily 0:02:47.800 --> 0:02:51.320 involved in a shareholder interface. Of course, been in a 0:02:51.320 --> 0:02:54.760 cooperative plenty of times, certainly those times and you're offshore, 0:02:55.120 --> 0:02:58.680 will you come back to New Zealand for workshops? Or 0:02:58.720 --> 0:03:01.480 meetings as what it may be, and there are opportunities 0:03:01.520 --> 0:03:02.760 at that point in time be going and spend some 0:03:02.800 --> 0:03:05.560 time on farm and I enjoyed those times actually, and 0:03:05.760 --> 0:03:07.560 I have fond memories and still keep in touch with 0:03:07.840 --> 0:03:09.920 with some of those farmers now that actually hosted me 0:03:10.160 --> 0:03:13.079 and at those times. And so that was I guess 0:03:13.120 --> 0:03:16.680 my first for anto farming. But you know, how can 0:03:16.680 --> 0:03:18.800 you grow up in New Zealand without knowing the impact 0:03:18.800 --> 0:03:21.520 that rural New Zealand has on the economy anyway, So 0:03:21.600 --> 0:03:22.840 that was my involvement. 0:03:23.240 --> 0:03:25.079 It's been quite a journey though, hasn't it. I mean, 0:03:25.200 --> 0:03:28.400 Fonterra today in twenty twenty five is probably quite a 0:03:28.400 --> 0:03:32.600 different company to what you knew right through that tenure, 0:03:32.639 --> 0:03:35.520 I imagine, and if we look at today, it feels 0:03:35.600 --> 0:03:39.360 like the change is more to a business to business 0:03:39.400 --> 0:03:43.800 relationship in terms of your customers. If we look at 0:03:43.880 --> 0:03:46.240 that compared to where it was, it had you know, 0:03:46.400 --> 0:03:50.960 more consumer focus in some ways explort obviously, always how 0:03:50.960 --> 0:03:52.760 would you describe that transition? 0:03:53.720 --> 0:03:56.600 Yeah, but even if I go back to my early 0:03:56.680 --> 0:03:59.440 days in the industry, you have to remember that New 0:03:59.520 --> 0:04:01.440 Zealand went through through significant milk growth. You know, the 0:04:01.480 --> 0:04:03.600 early part of the two thousand and twenty ten, New 0:04:03.680 --> 0:04:07.200 Zealand was growing significant milk through that period, and so 0:04:07.560 --> 0:04:09.600 you know, I was involved at a time where you know, 0:04:10.400 --> 0:04:11.600 the phrase was any any. 0:04:11.440 --> 0:04:12.240 Sale was a good sale. 0:04:12.280 --> 0:04:14.720 And by that what we meant was we had so 0:04:14.840 --> 0:04:17.320 much milk coming at us in the international market. We 0:04:17.320 --> 0:04:19.320 were out there finding new homes with this milk all 0:04:19.360 --> 0:04:21.960 the time. And of course that meant you had you 0:04:22.000 --> 0:04:24.599 were in all channels, you're in all categories, you're in 0:04:24.640 --> 0:04:28.440 all markets, because as I say, every sale it was 0:04:28.480 --> 0:04:30.960 a good sale. We're now you're in a situation where 0:04:31.000 --> 0:04:32.560 milk is no longer in that growth phase, and so 0:04:32.680 --> 0:04:34.840 therefore you can be a bit more selective around who 0:04:34.920 --> 0:04:37.479 you play with, where you play, what categories, and which channels, 0:04:37.720 --> 0:04:39.680 which is also brought about the change in our recent 0:04:39.680 --> 0:04:41.359 strategy around we're going to be more focused to you 0:04:41.480 --> 0:04:43.760 to the point you say, around our business to business 0:04:44.000 --> 0:04:46.839 because we believe that's where our future lies. It's where 0:04:46.839 --> 0:04:50.039 a competitive advantage has always been. We've also had just 0:04:50.080 --> 0:04:52.159 had to be beyond that. When you think about that 0:04:52.200 --> 0:04:54.600 significant milk growth through those through those really part of 0:04:54.600 --> 0:04:57.680 the two thousands, so you know, it's evolving with both 0:04:57.680 --> 0:05:00.839 the dynamics of the company, the dynamic of the industry. 0:05:00.839 --> 0:05:03.919 You play in some of the geopolitical situation that we 0:05:03.960 --> 0:05:06.440 see ourselves in. You know, if you're not focused and 0:05:06.480 --> 0:05:09.160 targeted around where you think you're going to have the advantage, 0:05:09.240 --> 0:05:12.440 you know, you run the risk of being you know, 0:05:12.800 --> 0:05:15.120 running a market if you like. And so from our perspective, 0:05:15.640 --> 0:05:17.560 all those things have played into our new strategy, which 0:05:17.600 --> 0:05:18.480 we launched late last. 0:05:18.400 --> 0:05:23.880 Year thinking of geopolitical Donald Trump, now the president of 0:05:23.920 --> 0:05:26.839 the US, has talked a lot about tariff. So obviously 0:05:26.880 --> 0:05:31.119 we do and I think Fonterra sends product to the US. 0:05:31.320 --> 0:05:34.760 Any idea what impact that might have or is it 0:05:34.800 --> 0:05:35.240 too early. 0:05:36.080 --> 0:05:39.560 Well, he's been vocal, i think, right through his campaign 0:05:39.920 --> 0:05:41.920 around what he's going to do with with tariff, and 0:05:41.920 --> 0:05:44.200 you've seen that play out recently with with Canada and 0:05:44.279 --> 0:05:47.719 Mexico and China. Some of the numbers that he's talked 0:05:47.720 --> 0:05:49.560 about different from what he talked about in the election 0:05:49.960 --> 0:05:54.000 and the election campaign that said, we always expected there 0:05:54.000 --> 0:05:56.480 would be some some changes to what we've probably experienced 0:05:56.480 --> 0:05:58.680 in the past in the past few years. So making 0:05:58.720 --> 0:06:01.159 sure you understand and be prepared for. That is what 0:06:01.200 --> 0:06:04.320 we've been focused on as an organization. But also you've 0:06:04.320 --> 0:06:06.840 got to go back and realize, ninety five percent our 0:06:06.880 --> 0:06:08.960 business is exportant and always has been. 0:06:09.600 --> 0:06:10.280 And you know, there. 0:06:10.200 --> 0:06:11.960 Wouldn't be a day go by where we don't have 0:06:12.040 --> 0:06:13.919 some issue we're dealing with in some corner of the 0:06:13.920 --> 0:06:16.800 world somewhere. And so while this is on a larger 0:06:16.800 --> 0:06:19.839 scale than what we've ever seen probably for quite some time, Yeah, 0:06:20.240 --> 0:06:21.800 we know how to deal with these things. And so 0:06:21.839 --> 0:06:24.279 it's about being diversified and how you go to market 0:06:24.680 --> 0:06:29.840 diversified in your custom relationships globally, making sure you're agile enough, 0:06:29.880 --> 0:06:32.359 you've got a strong balance sheet to withstand things that 0:06:32.400 --> 0:06:34.960 may be throw it at you. So so you know, 0:06:35.320 --> 0:06:37.800 not a great outcome. And what he talks about around 0:06:37.839 --> 0:06:41.400 twis ultimately our perspective is you know that the American 0:06:41.400 --> 0:06:43.040 consumer is probably going to be the loser and all 0:06:43.080 --> 0:06:44.719 of this, you know that the cost will clearly be 0:06:44.760 --> 0:06:46.960 passed on. Already I've seen that play out in the 0:06:47.040 --> 0:06:49.000 last couple of days with Canada and Mexico. 0:06:49.120 --> 0:06:50.320 So not ideal. 0:06:50.400 --> 0:06:53.119 If everyone's in the same boat, I mean, it doesn't 0:06:53.200 --> 0:06:56.280 change our position globally but it's certainly something that we 0:06:56.320 --> 0:06:58.520 need to think about and be concerned about as we 0:06:58.600 --> 0:07:01.800 head into I think a different world era than what 0:07:01.800 --> 0:07:02.760 we've been in previously. 0:07:03.800 --> 0:07:06.359 Thinking of markets, I know, China has always been I 0:07:06.360 --> 0:07:09.080 think your largest. We've just talked about the US, but 0:07:09.120 --> 0:07:11.880 there must be other opportunities Southeast Asia. What would you 0:07:11.920 --> 0:07:15.280 say are the emerging markets and your core markets? 0:07:15.080 --> 0:07:18.200 At the moment, China sort of speaks for itself, and 0:07:18.240 --> 0:07:20.160 it's been roughly a third of our book for quite 0:07:20.160 --> 0:07:21.800 some time, and that comes and goes a little bit, 0:07:21.880 --> 0:07:24.000 and the economy hasn't been great there the last couple 0:07:24.040 --> 0:07:26.440 of years, but we're seeing that re emerged and so 0:07:26.440 --> 0:07:29.000 so again talk about that roughly a third of our book. 0:07:30.280 --> 0:07:32.760 You know, we see you free trading group with the 0:07:32.840 --> 0:07:35.040 likes of the United Kingdom starting to really sort of 0:07:35.040 --> 0:07:38.040 come into its own and we're making some great progress there. 0:07:38.520 --> 0:07:40.840 North America, we've talked about that, but that is a 0:07:40.880 --> 0:07:44.760 good market for us. But remember, you know, the large 0:07:44.800 --> 0:07:50.480 developed economies of Europe, North America, you know, India are 0:07:50.720 --> 0:07:53.120 very protected when it comes to the to dairy access 0:07:53.120 --> 0:07:55.000 and we don't get we don't get free access into 0:07:55.080 --> 0:07:57.680 these countries from a commodity perspective, so it means we've 0:07:57.680 --> 0:07:59.600 got to think differently anyway, and we have done for 0:07:59.640 --> 0:08:01.800 quite some time. So it's around where what is the 0:08:01.880 --> 0:08:03.720 nutritional value of the products we're trying to send, and 0:08:03.840 --> 0:08:06.480 what are the customer relationships where they wanted something unique 0:08:06.520 --> 0:08:08.640 that we have, whether it be from an intellectual property, 0:08:09.040 --> 0:08:12.119 from a nutrition perspective, or even from the wavy farm. 0:08:12.240 --> 0:08:15.360 And so bringing those three things together around and using 0:08:15.400 --> 0:08:19.320 that to access markets outside of the commodity sphere. But 0:08:19.360 --> 0:08:22.480 then you talk about Southeast Asia minutes our backyard, it's 0:08:24.040 --> 0:08:26.880 you know, we see huge prospects through there and continue 0:08:26.920 --> 0:08:29.600 to see prospects. We've been those markets again for for 0:08:29.640 --> 0:08:31.560 a number of years. In it they don't get a 0:08:31.600 --> 0:08:36.000 lot of mention. I think, you know, places like Vietnam. 0:08:36.120 --> 0:08:38.280 It's one of the largest growth stories for us in 0:08:38.280 --> 0:08:40.840 the last couple of years. There's one hundred million people 0:08:40.840 --> 0:08:43.040 in Vietnam. People sort of lose sight of that, and 0:08:43.200 --> 0:08:45.200 it's just around the corner from Olpispeitre. 0:08:45.280 --> 0:08:48.959 So they've got a rising birth rate still and like say. 0:08:48.760 --> 0:08:53.520 The West, yeah, more than the West, but certainly slowed 0:08:53.520 --> 0:08:55.600 down from what you would have seen in the past decade. 0:08:55.640 --> 0:08:59.960 So not not not China stats or Japan or the weird, 0:09:01.840 --> 0:09:03.599 but not also the growth rates that you see in 0:09:03.640 --> 0:09:05.960 the likes of Africa. We still see significant growth. Middle 0:09:05.960 --> 0:09:08.400 East and Africa birth rates are still continued to grow 0:09:08.400 --> 0:09:11.520 a significant rates. So it's slowing down from where they 0:09:11.520 --> 0:09:13.720 have been, but still off a very high base. 0:09:14.000 --> 0:09:17.040 Is it infant formula or the whole spectrum? What what 0:09:17.120 --> 0:09:19.120 sort of ingredients and the like are we thinking? 0:09:19.720 --> 0:09:22.040 So, you know, our focus around the ingredient space is 0:09:22.360 --> 0:09:25.120 mainly in that sports and active lifestyles and the adult nutrition. 0:09:25.440 --> 0:09:28.320 We're not on the pediatric I mean, we supplied some 0:09:28.360 --> 0:09:31.400 pediatric ingredients, but we decided quite some time ago that 0:09:31.400 --> 0:09:33.800 we weren't going to focus on pediatrics and our focus was, 0:09:33.880 --> 0:09:36.920 as I say, the sports and active lifestyles, the medical nutrition, 0:09:37.000 --> 0:09:38.880 and the healthy aging. And so we see those as 0:09:38.920 --> 0:09:41.760 growth categories as those populations. To you to the point 0:09:41.760 --> 0:09:44.560 you made, as those populations start to well, birth rates 0:09:44.559 --> 0:09:47.160 start to decline, you know, the population is moving into 0:09:47.200 --> 0:09:49.560 the into the I guess the middle aged categories. That 0:09:49.559 --> 0:09:52.679 what we call it, and so you know, developing products 0:09:53.280 --> 0:09:55.320 to suit the lifestyles of those people. 0:09:56.040 --> 0:09:59.360 What is the future you think for the dairy broadly 0:09:59.520 --> 0:10:03.040 for New z not just Fonterra. We were always known 0:10:03.360 --> 0:10:07.840 as a pretty hefty dairy producer. The world has changed. 0:10:08.320 --> 0:10:10.440 Where do you see things going? I mean, will we 0:10:10.559 --> 0:10:15.040 be known as we were previously as a dairy producer? Well, 0:10:15.160 --> 0:10:20.160 how do you see that changing with you know, alternative milks, tariffs? Yeah, 0:10:20.200 --> 0:10:21.199 the world's a different place. 0:10:21.480 --> 0:10:24.000 Well, the world is a different place. But I think 0:10:24.040 --> 0:10:26.200 what we've seen even in the last two or three 0:10:26.280 --> 0:10:28.840 years and even go back through through COVID, you know, 0:10:28.880 --> 0:10:31.439 the importance of the rural sector plays in New Zealand, 0:10:32.559 --> 0:10:35.000 the importance of the dairy sector that plays in New Zealand. 0:10:35.040 --> 0:10:37.320 Will I think we'll continue to play out well into 0:10:37.320 --> 0:10:39.000 the future. And we've seen that play out now with 0:10:39.920 --> 0:10:43.480 pretty healthy pricing. And so while there is you know 0:10:43.520 --> 0:10:46.760 that the tariff position, you talk about geopolitics and play 0:10:47.600 --> 0:10:53.040 you know, the rise of alternative products despite that, you know, 0:10:53.080 --> 0:10:55.800 we've seen the milk price, our forecast milk pricess you'll 0:10:55.840 --> 0:10:59.000 be the highest that will ever pay. And so the 0:10:59.320 --> 0:11:02.600 future is and that's against the backdrop of I think 0:11:02.600 --> 0:11:06.120 a growing population globally, a rising middle class, throughout some 0:11:06.120 --> 0:11:08.560 of those Asian economies that we refer to, which is, 0:11:08.760 --> 0:11:12.280 as I say, as our backyard, and people wanting to 0:11:12.280 --> 0:11:14.480 know where their product comes from and how it's farmed. 0:11:14.480 --> 0:11:16.040 And I think we have a unique proposition here in 0:11:16.080 --> 0:11:19.439 New Zealand where predominantly cows are outside, they're grazing on 0:11:19.480 --> 0:11:21.880 the pasture, they're taking advantage of the sun on the 0:11:21.960 --> 0:11:24.280 rain we get in this country, and that's something that 0:11:24.360 --> 0:11:28.679 is I think is quite unique on a global scale 0:11:29.240 --> 0:11:30.160 at scale. 0:11:30.360 --> 0:11:31.079 And that's the other point. 0:11:31.120 --> 0:11:33.840 There are always pastor of farming systems around the world, 0:11:33.880 --> 0:11:36.360 but it's scale. Very few people can do that, and 0:11:36.400 --> 0:11:38.760 so when you sort of marry those things up together, 0:11:38.880 --> 0:11:43.240 it's a unique proposition that very few of anyone can 0:11:43.280 --> 0:11:45.400 do and so that I think has a great future 0:11:45.400 --> 0:11:46.360 for the industry as a whole. 0:11:46.760 --> 0:11:50.680 We're really good at producing milk products, if you like. 0:11:50.800 --> 0:11:52.760 But then it's as you sort of said before, it's 0:11:52.760 --> 0:11:54.400 a secret source of what we do with the oos 0:11:54.480 --> 0:11:57.120 ingredients and the value adds stuff. How good are we 0:11:58.000 --> 0:12:02.079 extracting the science and the formulas all that sort of thing. 0:12:02.200 --> 0:12:06.680 Is that something that I mean, obviously Frontier has pursued that, 0:12:06.880 --> 0:12:09.800 but I mean in New Zealand, will that change, you know, 0:12:09.840 --> 0:12:12.440 our focus from being a producer to someone who's got 0:12:12.480 --> 0:12:13.840 a more value add in there. 0:12:14.679 --> 0:12:17.000 I think there'll always be a combination of both. And 0:12:17.120 --> 0:12:19.600 you know there's a lot of new I say new, 0:12:19.640 --> 0:12:21.200 but you know the last sort of five to ten years, 0:12:21.200 --> 0:12:23.720 a lot of new entrance to the dear industry here 0:12:23.760 --> 0:12:25.880 in New Zealand through through the deregulation of. 0:12:25.840 --> 0:12:27.560 The industry back twenty odd years ago. 0:12:28.200 --> 0:12:29.920 And so you know a lot of those people come 0:12:29.960 --> 0:12:32.160 in the early days and make commodities and that would 0:12:32.160 --> 0:12:34.880 probably make sense to get to get a foothold. But 0:12:35.000 --> 0:12:37.760 as things evolve and you get stronger customer partnerships that 0:12:37.800 --> 0:12:39.360 you know, they play on the same position that we 0:12:39.400 --> 0:12:42.520 do around the pasta system and put some effort in 0:12:42.559 --> 0:12:45.840 time and effort into things like innovation. I can see 0:12:45.840 --> 0:12:48.560 that continue to evolve in New Zealand holding quite a 0:12:48.559 --> 0:12:51.080 strong position when it comes to innovative dairy products. 0:12:51.440 --> 0:12:54.800 Let's look then at the new strategy and the ingredients 0:12:54.960 --> 0:12:57.240 business first. I mean there's the food services which I 0:12:57.280 --> 0:13:01.080 think is more restaurant around the world ingredients and so 0:13:01.120 --> 0:13:03.720 what are we talking how would you describe what that 0:13:03.800 --> 0:13:04.440 business starts. 0:13:04.520 --> 0:13:08.680 Yeah, so I refer to that that aging population and 0:13:08.679 --> 0:13:10.640 and you know, you go, you go to a country 0:13:11.559 --> 0:13:15.400 such as Japan, you know, and you know that their 0:13:15.440 --> 0:13:18.000 population is age and I think that's that's well documented 0:13:18.559 --> 0:13:23.040 and and they're relatively well off by global standards, and 0:13:23.120 --> 0:13:25.840 so you know, consumers are looking for something that can 0:13:25.920 --> 0:13:30.760 can make their life healthier, life goes longer. So so 0:13:30.800 --> 0:13:31.880 of course they get out and they do a bit 0:13:31.920 --> 0:13:34.400 of exercise, and we see that in the Japanese population, 0:13:34.800 --> 0:13:37.720 but they complement that with also their their their diet 0:13:37.800 --> 0:13:40.840 and so they also have a wonderful diet around seafood 0:13:40.880 --> 0:13:42.680 and those sort of things. But they're starting to add 0:13:42.720 --> 0:13:45.600 things like additional protein into their diets and and that's 0:13:45.640 --> 0:13:47.560 exactly where we play. How can we support them by 0:13:47.600 --> 0:13:50.400 adding more protein, more calcium into their diet that may 0:13:50.480 --> 0:13:53.360 they may not get by consuming the general products that 0:13:53.679 --> 0:13:55.960 they that they consume. And so you know that for 0:13:56.080 --> 0:13:58.680 us is right in our wheelhouse around you know, healthy, aging, 0:13:59.040 --> 0:14:01.319 sports and active. Last then you get into the other 0:14:01.400 --> 0:14:04.599 end of the spectrum where you know people are consuming 0:14:05.960 --> 0:14:08.800 you know, medical foods. They can't they can't take anything 0:14:08.800 --> 0:14:11.480 through their mouth. Andy may have some issues with swallowing 0:14:11.600 --> 0:14:14.559 or and so you know, how do they ingest something 0:14:14.600 --> 0:14:17.880 that is good on the gut, but it gives them 0:14:18.040 --> 0:14:21.680 the high protein content that they need to sustain a 0:14:21.720 --> 0:14:25.000 longer life. And so developing products at a very high 0:14:25.520 --> 0:14:28.480 top of the pyramid, if you like that. The it's 0:14:28.520 --> 0:14:30.760 a it's a niche area, but it's a growing area 0:14:31.200 --> 0:14:36.160 again with aging populations. You know, health issues globally, and 0:14:36.240 --> 0:14:37.880 you think about something like North America that have got 0:14:37.880 --> 0:14:39.920 a few health issues in certain areas, and you know, 0:14:40.160 --> 0:14:42.320 we can come up with products to support them, working 0:14:42.360 --> 0:14:45.920 with those multinationals that have very strong relationships with maybe 0:14:45.920 --> 0:14:49.120 the medical or the hospital areas in the North America. 0:14:49.160 --> 0:14:51.760 So that's that's certainly one area. And then at the 0:14:51.800 --> 0:14:55.400 commodity and we'll always have some commodity products to support, 0:14:55.440 --> 0:14:57.160 you know, underpinning their milk price that we need to 0:14:57.160 --> 0:15:00.440 pay a farmer, our farmercyelders. But you know, volatility, which 0:15:00.480 --> 0:15:03.200 didn't exist fifteen twenty years ago in this industry is 0:15:03.600 --> 0:15:06.080 here and it's rife. I mean, prices will go up 0:15:06.080 --> 0:15:09.320 and down quite significantly. And so how is there an 0:15:09.360 --> 0:15:11.800 opportunity for us to take advantage? If you like of 0:15:12.080 --> 0:15:14.720 making some cash out of that volatility to support again 0:15:14.760 --> 0:15:17.880 as you older, so's there's a financial play in that 0:15:17.720 --> 0:15:20.240 in that in that position as well. And then the 0:15:20.280 --> 0:15:22.680 last piece when you talk when you talk about ingredients 0:15:23.120 --> 0:15:25.520 is around how we make the products, and it's it's 0:15:25.840 --> 0:15:28.560 you know, a truck goes on farm and collects the 0:15:28.560 --> 0:15:30.440 milk and drives down the road, dump dumps at at 0:15:30.440 --> 0:15:33.760 a factory, it goes in as white milk, and it 0:15:33.760 --> 0:15:37.640 turns up as a product anywhere along that spectrum. We 0:15:37.720 --> 0:15:40.360 believe there's some significant technologies that we can start to 0:15:40.360 --> 0:15:42.840 bring to a manufacturing process that both reduce costs but 0:15:42.920 --> 0:15:44.920 also think about new products that you may be able 0:15:44.920 --> 0:15:47.800 to develop. So all of that encompassing into what we 0:15:47.840 --> 0:15:52.960 believe is a strong ingredients proposition that that really I 0:15:53.000 --> 0:15:54.880 think we just scratching the surface of it. If I 0:15:54.880 --> 0:15:57.800 look through history, how the potentials as ends. 0:15:59.160 --> 0:16:02.240 Just thinking we'll we'll jump to food service in a moment, 0:16:02.360 --> 0:16:06.000 but just thinking about R and D. That's what it 0:16:06.040 --> 0:16:08.360 sounds a lot like. And as you say there's lots 0:16:08.360 --> 0:16:11.720 of potential, does that mean that the company would be 0:16:11.720 --> 0:16:14.320 spending more in that area? Given you know what you're 0:16:14.320 --> 0:16:15.000 trying to achieve. 0:16:15.640 --> 0:16:17.360 Yeah, we've wrapped up our R and D spend quite 0:16:17.400 --> 0:16:21.240 significantly in the last few years. And so again there's 0:16:21.240 --> 0:16:23.120 a spectrum of that. There's sort of the near term, 0:16:23.320 --> 0:16:24.960 you know, how do we adapt a product that's been 0:16:25.000 --> 0:16:27.240 developed in Palms and North at a research center many 0:16:27.320 --> 0:16:31.360 years ago. How did that get adapted into to suit 0:16:31.400 --> 0:16:33.800 the palette or the consumer and say China or the 0:16:34.240 --> 0:16:38.200 or the consumer in South Korea. And so there's there's 0:16:38.280 --> 0:16:40.760 this sort of short term application work that we do. 0:16:41.400 --> 0:16:44.160 But then there's also what does that breakthrough technology? Is 0:16:44.200 --> 0:16:47.920 what is the next protein or amino acid that is 0:16:47.960 --> 0:16:50.040 this and milk that we haven't yet developed, And there's 0:16:50.080 --> 0:16:52.160 a lot of work that goes on and pumps the 0:16:52.200 --> 0:16:54.280 North every day around our researchers that start to think 0:16:54.280 --> 0:16:56.720 about that, and so we'll continue to invest in that. 0:16:57.280 --> 0:17:00.560 And you referred before around fermented boks and some of 0:17:00.600 --> 0:17:03.240 these sort of things. You know, we you know, we 0:17:03.560 --> 0:17:06.640 believe that will play a part in the future. We're 0:17:06.640 --> 0:17:09.000 in the spectrum of of consumers. Is it going to 0:17:09.000 --> 0:17:11.840 be at the at the you know, the consumers of 0:17:11.880 --> 0:17:14.320 white white milk end of you know, putting on their 0:17:14.359 --> 0:17:14.960 sereal in the. 0:17:14.880 --> 0:17:16.880 Morning or is it or is it going to be those. 0:17:16.720 --> 0:17:19.320 At the medical nutrition And we probably think more towards 0:17:19.320 --> 0:17:21.639 the medical nutrition. And therefore, you know, how do we 0:17:21.720 --> 0:17:24.239 understand how that technology plays out? So, yeah, we are 0:17:24.280 --> 0:17:27.600 investing heavily in those areas. In addition to as I say, 0:17:27.640 --> 0:17:28.960 you know, how do how do we make sure that 0:17:29.000 --> 0:17:32.879 the that the next pizza, cheese, you browns consistently and 0:17:32.920 --> 0:17:36.240 stretches consistently, things things that the consumer just expects. 0:17:37.440 --> 0:17:40.520 So food service, then as I understand that that's more 0:17:40.640 --> 0:17:47.119 like restaurants around the world, and maybe cream mozzarella tell me, 0:17:47.760 --> 0:17:49.760 is that the key things that they're after? 0:17:50.240 --> 0:17:53.119 Yeah, predominantly and and so cream is sort of the 0:17:53.119 --> 0:17:56.200 hero product, if you like, in in the Chinese market. 0:17:56.680 --> 0:17:58.640 I the eleven varieties of. 0:17:58.600 --> 0:18:01.960 Cream, right, yeah, there are and and so you know, 0:18:02.040 --> 0:18:03.919 maybe for you and I you look at it and 0:18:04.040 --> 0:18:06.639 taste it, and and they may seem the same, but 0:18:06.640 --> 0:18:10.679 but the applications are different. And so you know, you 0:18:10.760 --> 0:18:12.560 might you might use a cream to make a past 0:18:12.560 --> 0:18:14.480 the sauce, or you might use a creams that goes 0:18:14.520 --> 0:18:17.000 on on a on a on a sponge cake, and 0:18:18.280 --> 0:18:20.240 they are different creams. And then there are creams that 0:18:20.280 --> 0:18:24.000 go into tea and into coffees, which scones which I 0:18:24.119 --> 0:18:27.480 used differently, And so making sure you've got the right 0:18:27.640 --> 0:18:29.760 product for the right application. Of course, if you think 0:18:29.760 --> 0:18:33.080 about you know, a large bakery chain, you know, you know, 0:18:33.160 --> 0:18:36.600 for them, it's around through put, it's around usability of 0:18:36.600 --> 0:18:40.399 that product, it's around yield. You know, they make a cake, 0:18:40.440 --> 0:18:44.320 how do they ensure that the cake stays a big 0:18:44.359 --> 0:18:46.920 if that's the big in the cabinet and doesn't sink 0:18:46.920 --> 0:18:49.480 over time, over a couple of hours. And so you're 0:18:49.480 --> 0:18:51.600