Core Viewpoint - Fonterra's decision to merge its Anchor consumer products team with its foodservice team in the Greater China region reflects a strategic response to declining performance, aiming to reduce costs and improve efficiency amid a challenging market environment [1][4][10] Performance Decline Pressure - Fonterra's revenue in the Greater China region for the fiscal year 2024 was NZD 6.369 billion, a year-on-year decline of approximately 9.94% [4] - The foodservice business generated NZD 2.377 billion, while the consumer products segment reported a loss with revenues of NZD 394 million [4] - The merger is seen as a necessary adjustment due to the underperformance of the consumer products division, which has struggled in the direct-to-consumer market [4][8] Strategic Business Shift - Fonterra announced plans to divest its consumer products business globally, focusing on becoming a B2B dairy supplier, while retaining its consumer products in Greater China due to market considerations [3][4] - The brands involved in the global divestment include Anchor, Mainland, Kāpiti, Anlene, Anmum, Fernleaf, Western Star, and Perfect Italiano [3] Positive Outlook on Foodservice Business - The foodservice segment showed promising growth, with a revenue increase of approximately 4.79% for the fiscal year 2024, and a 7.46% increase in the Greater China region [6] - The Greater China market accounted for over 58% of Fonterra's foodservice revenue, indicating its significance to the overall business [6] Market Opportunities - The Chinese baking market is expected to expand significantly, with projections estimating a market size of CNY 859.56 billion by 2029, driven by rising consumer spending and changing consumption patterns [6] - Fonterra's recent product launches, including cream products tailored for the Chinese market, highlight its commitment to capitalizing on growth opportunities in the foodservice sector [7] Challenges Ahead - The merger of the two business units will face challenges such as product overlap, team integration, and competitive pressures from both international and local players in the B2B market [8][9] - Effective management of brand positioning and product differentiation will be crucial for Fonterra's long-term growth and success in the region [10]