Fonterra, Alibaba collaboration ushers in new era of retail experiences in China

The total extent of the Alibaba empire is amazing.

From Taobao and Alibaba Cloud to Lazada Group and Youku Tudou, the company's web of subsidiaries and arms spreads across a wide range of industries, including the dairy sector.

Hema Fresh is Alibaba's new retail concept which aims to combine brick-and-mortar shopping with an innovative digital experience.

The company has partnered with global dairy industry giant Fonterra to launch new milk products in China.

The new Daily Fresh milk range is now available in Hema's 14 stores in Shanghai and Suzhou in 750mL bottles, sourced directly from Fonterra's farm hub in Hebei province.

Stock is replenished overnight, and the products have unique product labels to match each day if the week – as the duo aims to emphasise the freshness of the milk.

Initial volumes are currently around three metric tonnes daily, with plans to scale-up over time and expand with the retailer as it expects rapidly grow its footprint of stores across China.

President of Fonterra Greater China Christina Zhu says this new product delivers to growing domestic demand for higher-quality fresh products, as part of the 'premiumisation' of China's consumer categories.

"Shoppers here in China are becoming increasingly sophisticated in terms of their tastes and preferences, which are being driven by rising household incomes," comments Zhu.

"More than ever before, consumers are consciously seeking products that are fresh, nutritious and safe, and our new product for Hema caters to this.

Hema emerged on to the Chinese retail scene in early 2016 as a signpost of China's new retail trend, which Alibaba founder Jack Ma describes as the intersection of online and offline shopping, logistics and data.

Customers can shop in-store and use their mobile phones to pay for the goods, or order online for a 30-minute delivery within a three-kilometre radius.

Moreover, Hema utilises the wealth of data it gathers from consumers to provide a tailored and personalised shopping experience for each customer.

Hema Fresh CEO and founder Hou Yi says he is excited by the strategic co-operation between the two companies.

"This co-operation between two powerful companies is set to redefine the concept of fresh milk in the new retail era," adds Hou.

"As a global leader in the dairy industry, Fonterra is well-known for quality milk pools, world-class breeding techniques and advanced experience in food safety and quality, which matches well with what we advocate.

Zhu explains that the new product highlights how Fonterra's business in China is leveraging the strength of its local milk pool, spread across three farming hubs.

"No other multinational dairy company in China has a local milk pool to draw from, so we are in an advantageous position," continues Zhu.

"This milestone with Hema is a sign of things to come and indicates that our push to shift more of our local milk into higher-yielding consumer and foodservice products is well-and-truly underway.