Australian Dairy Industry In Focus 2009 - Dairying For Tomorrow

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in 2008/09 as they tend to be an impulse purchase for many consumers – bought in the petrol and convenience retail sales channel – as economic uncertainty led consumers to watch their spending more closely than usual. On the other hand, UHT milk volumes grew strongly last year, aided by some significant supermarket promotional activity. There are now just two major players in the Australian drinking milk market: the enlarged National Foods after its takeover of the Dairy Farmers Group in late-2008 (with the Pura and Dairy Farmers brands) and Parmalat (with the Pauls brand). There are also a number of smaller players in the marketplace with strong regional brands. The supermarket channel’s share of Australian drinking milk sales has continued to trend steadily up over recent years – to 50% in 2008/09. Supermarkets benefited generally from increased ‘at home’ eating as consumers sought to economise over the past year. Private label brands account for 52% of total supermarket milk volumes, up from around 25% in 1999/2000. Their average price is significantly less than company branded products. This lower average price is due to a combination of product and pack size mix – with a greater proportion of private label purchases being bulk regular full cream milk. On the packaging front, plastic bottles now account for 80% of all milk sales in supermarkets, with the balance split evenly between gable-top cartons and UHT packs. There have also been significant movements within the pack sizes bought by consumers in supermarkets. While the 2-litre plastic bottle remains the most popular size, with nearly 40% share, this is down from close to 50% eight years ago. Similarly, the combined share of 1-litre cartons and plastic bottles has slipped from 33% to 20%. The major change has been in the explosive growth of the 3-litre plastic bottle, increasing its share of all supermarket milk sales from 13% to 35% since it first appeared in June 1998. In 2008/09, the average price of branded milk increased 5.7% to $2.20 per litre. When combined with a 1.8% increase in the average private label price to $1.24 per litre, delivered an increase in the average supermarket price of 6 cents per litre to $1.71 per litre. Supermarket sales volumes grew by 3.3% in 2008/09; with the comparative sales performance between branded (+0.2%) and private label milks (+6.5%) varying markedly. Retail milk prices fell 11 cents per litre from late-February 2009 as the Dairy Adjustment Levy, used to fund the industry’s degregulation adjustment package, was removed from wholesales prices. See the section on Industry Levies on page 36 for more details. Australia exports relatively small volumes of milk – predominantly as UHT product – with 80% of the total going into the Asian region and 13% into the island countries of the Pacific region. See Appendix 5 for more details of drinking milk exports. 26 Australian Dairy Industry In Focus 2009
Cheese Australia produced 342,000 tonnes of cheese in 2008/09 – a 5% decrease on the previous year. While the production of cheddar, hard grating and mouldripened cheese types increased on the previous year – due in part to milk availability – the production of semi hard and fresh cheeses declined quite significantly as Australia’s key export markets contracted due to the global economic downturn. The longer-term trend away from cheddar cheeses towards non-cheddar cheese types has been apparent in both the production and consumption data for Australia for some years. However, 2008/09 saw a reversal in this trend, with the non-cheddar share of total production dropping back from 52% to 48%. It is estimated that around 55% of the domestic sales of Australian cheese are through supermarkets. A significant proportion – mostly specialty cheeses – is sold through the smaller independent retail trade, with the remainder used in the foodservice sector and in food processing applications. Cheese is a major product for the Australian dairy industry, with sales of 205,000 tonnes within Australia, valued at an estimated A$1.7 billion, and export sales of 144,650 tonnes, worth more than A$789 million in 2008/09. Supermarket sales volumes returned to growth in the past year, up by nearly 2% in 2008/09, with average retail prices increasing by 10% during the year. Cheddar cheese sales grew 1%, while the non-cheddar cheese types grew by 3%; continuing a slow but steady trend away from cheddar. Non-cheddar cheeses now make up a third of all supermarket sales – up from a quarter at the start of the decade. See Appendix 4 for more details of supermarket cheese sales. Cheese imports accounted for 22% of estimated domestic sales last year. In 2008/09, 72% of the 58,800 tonnes of cheese imported into Australia was sourced from New Zealand. The bulk of the remaining cheese imports came from Europe. Japan remained Australia’s most important overseas cheese market in 2008/09 and accounted for more than 50% of product exports, followed by the US, China, South Korea and Saudi Arabia. Australian cheeses were exported to more than 65 countries around the world last year. The trend away from cheddar cheeses to non-cheddar cheese types evident in the domestic market is also being reflected in Australia’s cheese exports; the noncheddar share of total export sales has steadily increased from 45% to 54% since the start of the decade. Table 14 Australian cheese production by type of cheese 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 (p) Cheddar 207,795 195,887 191,693 179,159 171,260 178,274 Semi Hard 88,712 90,714 76,813 75,529 73,467 61,700 Hard Grating 11,333 13,267 23,022 18,477 16,922 17,936 Fresh 70,880 83,649 75,441 84,443 90,967 75,194 Mould 5,042 4,833 5,847 6,030 7,968 8,912 Total Cheese 383,762 388,350 372,816 363,638 360,584 342,016 Source: Dairy manufacturers Australian Dairy Industry In Focus 2009 27
Page 1 and 2: Australian Dairy Industry In Focus
Page 3 and 4: Contents Foreword .................
Page 5 and 6: Dairy 2009: Situation & Outlook Bac
Page 7 and 8: What did farmers say in September 2
Page 9 and 10: Withdrawing stimulus too early coul
Page 11 and 12: The Australian dairy industry An im
Page 13 and 14: Farm facts Australia’s climate an
Page 15 and 16: y factors such as product and marke
Page 17 and 18: Australian dollar has lowered local
Page 19 and 20: Milk production While farm numbers
Page 21 and 22: Cows’ milk consists of solids (mi
Page 23 and 24: Dairy manufacturing As in the farm
Page 25 and 26: to which Australia is excluded from
Page 27: Drinking milk Regular or wholemilk
Page 31 and 32: Fresh and frozen dairy products Aus
Page 33 and 34: outlets account for only a small pe
Page 35 and 36: Industry organisations and structur
Page 37 and 38: Australian Dairy Industry Council T
Page 39 and 40: Appendices 1. Regions 38 2. Milk pr
Page 41 and 42: Appendix 2 - Milk production Figure
Page 43 and 44: curd and whey. The curd is cut, hea
Page 45 and 46: Appendix 4 - Supermarket sales Milk
Page 47 and 48: Tablespreads Table A11 Supermarket
Page 49 and 50: Table A15 Australian exports of who
Page 51 and 52: Table A18 Australian exports of but
Page 53 and 54: Appendix 6 - Imports Table A22 Impo
Page 56: Dairy Australia ABN 60 105 227 987

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