A dairy dilemma: Lewis Road Creamery takes aim at Fonterra's 'salt-of-the-earth' positioning

  • Marketing
  • December 16, 2016
  • Jihee Junn
A dairy dilemma: Lewis Road Creamery takes aim at Fonterra's 'salt-of-the-earth' positioning
A 95% Fonterra dominated world?

Who knew milk was such a not topic? Shots were fired this week when Lewis Road Creamery’s Peter Cullinane addressed an open letter to Theo Spierings, CEO of New Zealand’s largest and most global dairy brand, Fonterra. In the page-long letter published in The New Zealand Herald, Cullinane addressed what he saw as Fonterra’s “greedy” attempts at striking an exclusionary deal with North Island supermarkets which “would all but remove non-Fonterra brands” and give Fonterra “95% of the milk chiller”.

The letter brings up a number of grievances as Cullinane questions whether Fonterra has exercised fair practice by using its market power to overwhelmingly dominate supermarket shelf space. “A deal such as the one we understand Fonterra is proposing does not reflect shopper preferences and would all but remove or at best, severely restrict, shoppers’ right to choose.”

Accusing the dairy giant of such anti-competition practices have certainly struck a chord with the public. Hundreds took to Lewis Road Creamery’s Facebook page to express their support towards Cullinane’s letter. Not only is the post intriguing as an acute display of brand solidarity, but for the fact that whoever’s manning the Lewis Road account took the effort to respond to every comment either thanking individuals for their support or encouraging them to email the Fonterra communications team. 

Meanwhile, the public also took their frustration to Fonterra’s social media accounts, with the company having to respond to accusations of “wormy” tactics.

Egalitarianism is a value more-or-less historically hardwired into the New Zealand mindset. On sports fields across the country, ‘fair play’ is touted as the core essential value to how things should function. So if such ball tossing antics like rugby and netball are being held to such high standards, it shouldn’t come as a huge surprise that hundreds are calling for a level playing field in the country’s highest grossing export industry. 

Beyond the white noise of conjecture, whether Fonterra's really the 'bad guy' is still up for the debate. But it does pose a direct contradiction to the carefully cultivated image Fonterra has sought to establish around its brand. In a recent series of ads featuring the nation's captain and heartbeat, Richie McCaw stands in the hazy peaceful rural countryside as a diverse montage of Kiwi farmers go about their daily farm work. 

The ad itself is as mundane as it gets, but there's an underlying message as Fonterra tries to tap into the 'everyday man' image of rural New Zealand—humble, honest, hard-working, and down-to-earth. In other words, the complete antithesis to the larger-than-life corporate image of profit-hungry multinationals which many in the public now perceive Fonterra as. 

The message is conveyed much more explicitly in some of the company's other videos. In one clip, Fonterra's co-operative nature is heavily emphasised as a gruff, reassuring voice narrates that the best thing about Fonterra is that it's owned by the very people that make the products.

"I think a lot of people just look at it as a big company and don't realise that the farmers actually own that co-op. Always have, always will...Co-operative over corporate."

This 'co-operative over corporate' mantra comes up again in another video when McCaw is seen interviewing a pair of farmers, presumably in their own kitchen."Fonterra is owned by the shareholders, so we all have a buy-in to the company," says one of the farmers. And if the point wasn't clear enough, the clip brings up that dairy farmers populate the company's board of directors as well. 

Paul Catmur wrote an article recently about the cult of the decent bloke in an attempt to explain the enduring popularity of now former Prime Minister John Key. He wrote that like himself, many felt an affection towards Key "not because of his policies, but because he seems like a decent bloke to have a yarn and share a beer with... President Obama liked him enough to play golf with him and he could play golf with anyone in the world. Even Richie McCaw."

Clearly, Fonterra was attempting to tap into the same principle on a consumer scale. But with Lewis Road's latest attack on a potential milk shelf monopolisation, Fonterra's corporate image has reemerged in the public eye. Lewis Road may not be actively pushing a clear marketing agenda with their open letter (in response to a request to comment from StopPress, Lewis Road declined to comment as it was "not primarily an advertising/marketing issue, and right now we can’t do the questions justice"), it's safe to say that the majority of decisions made by Lewis Road have been grounded in the core principles of marketing-based thinking.

Some believe it's all just a publicity stunt by Cullinane, the former ad man, but the company's actions still go a long way in shattering the 'just another Kiwi company' image Fonterra has worked hard to cultivate. And whether it meant to or not, Lewis Road's letter has drawn the 'David vs Goliath' narrative between the two brands. The artisanal, boutique, small-business image is what Lewis Road thrives on, making it a legitimate voice of critique against Fonterra's practices. 

For now, the saga continues as Cullinane has refused to rule out legal action. Will it stop consumers from buying cheaper, more accessible bottles of Anchor milk for their coffee, tea, and cereal on a daily basis? That's something we'll have to wait and see.

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