Zhejiang Commercial Group signs annual Fonterra deal in China market push

Summary

Zhejiang Industrial Commercial Co, a subsidiary of Zhejiang Commercial Group, signed an annual cooperation letter of intent with Fonterra Ingredients at the Fonterra pavilion at the ninth China International Import Expo on 6 November, covering all product categories for 2026–2027. The letter of intent specifies that the 2026–2027 cooperation will cover Fonterra Ingredients' full product range in Greater China, including whole and skim milk powders, butter, anhydrous milk fat, cheese, casein and whey protein, and will be closely integrated with the company's sales operations. The total value of goods traded under the cooperation is up nearly 43 percent on last year.

Fonterra is one of the world's largest dairy exporters, with its dairy ingredients business ranked among the global leaders. Zhejiang Industrial Commercial has been an authorised distributor since the partnership began in 2008, and its trade volume with Fonterra grew by leaps and bounds in Fonterra's FY25 and FY26, ranking first among Fonterra's domestic distributors for two consecutive years and earning Fonterra's 'Annual Leap Forward Award'. In January–October 2026, Zhejiang Commercial Group's imported dairy business involving Fonterra generated revenue of RMB 919 million, up 111 percent year on year, with volume reaching 31,000 tonnes.

Non-Fonterra imported products generated revenue of RMB 287 million over the same period, completing the full-year target ahead of schedule. Zhejiang Industrial Commercial plans to use investment in and acquisition of a cheese factory as a breakthrough to continue advancing its integration of industry and trade.

Commentary

Fonterra, one of the world's largest dairy exporters, relies on its Greater China ingredients business as a key revenue source for New Zealand's dairy sector. The annual cooperation with Zhejiang Commercial Group, covering all dairy ingredient categories with total transaction value up 43 percent year on year, reflects continued Chinese demand for New Zealand dairy ingredients. For New Zealand small and medium-sized enterprises, the expansion of Fonterra's distribution network in China may squeeze the space for smaller brands to enter the Chinese market directly, though it could also bring indirect opportunities through supply chain collaboration.

Notably, Zhejiang Commercial Group plans to invest in and acquire a cheese factory to advance its integration of industry and trade, signalling that Chinese buyers are moving from simply purchasing ingredients to deeper participation in processing, which could reduce reliance on imported finished or semi-finished products in future. New Zealand small and medium-sized dairy firms should watch the growth potential of China's cheese market, but need to assess the risks of cooperating or competing with local processors. Meanwhile, Fonterra's distributor has ranked first for two consecutive years, indicating strengthened channel control, and smaller suppliers need to find differentiated products — such as organic, grass-fed or specialty dairy — to avoid head-on competition.

Per-capita dairy consumption in China continues to grow, but the market structure is shifting, and New Zealand companies need to move from simply exporting ingredients to offering technology, brands or customised solutions to maintain their position in the value chain.

Keywords: Fonterra, Zhejiang Commercial Group, China International Import Expo, annual cooperation letter of intent, dairy ingredients, all-category cooperation, distributor, integration of industry and trade

Photo by Leslin_Liu on Pixabay

Source: Sing Tao Global Network