Australian Dairy Farming Overview-2012: Consumption of Dairy Products12 February 2013
Australia's high milk consumption figures continue being strengthened by strong increases in Yogurt consumption the last 20 years as a leading 'healthy snack' and the rise of cheese consumption.
Australian Consumption of Dairy Products
The major Australian consumer dairy products are drinking milk, cheese, butter and butter blends, and yogurt.
Per capita consumption trends over the past two decades have varied quite significantly by individual product. These trends reflect changes in consumer tastes and preferences in response to a multitude of variables, such as multicultural influences on food trends, health perceptions around dairy products and manufacturers’ responses (with low-fat variants), new product development, flavour and packaging innovations, competitive category offerings, and the distribution and hence availability of products.
Per capita consumption of drinking milk is currently estimated at around 106 litres, growing strongly over the last two years, and at very high levels compared to many countries—thanks in no small part to the expansion of the ‘coffee culture’ in Australia during the last decade.
Cheese consumption has stabilised in recent years at just over 13kg per person; as has the split between cheddar to non-cheddar varieties— with approximately 60% being cheddar types and the remaining 40% spread across the wide range of non-cheddar cheese varieties available in Australia.
Annual per capita consumption of butter in Australia is marginally below 4 kgs. The introduction of butter and vegetable oil based dairy blends in the early-1990’s—which are easier to spread and lower in saturated fats—helped stabilise a long-term decline in butter sales. Consumers are also interested in the ‘naturalness’ of butter, together with its superior taste and cooking functionality.
Yogurt is the ultimate ‘healthy snack’ for time-pressed consumers, combining both convenience and health attributes; with per capita consumption at over 7kg per year.
Per Capita Consumption of Major Dairy Products (Litres/Kg)
Per Capita Consumption (Litres/Kg)
Regular or full cream milk is standardised to a milkfat content of around 3.4 to 3.6%.
Modified, reduced and low-fat milks are standardised to other specifications, with varying milkfat and solids non-fat levels. The cream removed during standardisation can be bottled as table cream or manufactured into butter or other dairy products.
Australian milk consumption has been steadily shifting from regular milk to modified milks, such as reduced and low-fat milks, over many years. This trend reversed for a period during 2008, as consumers responded to rapidly increasing retail prices by switching to the relatively lowerpriced regular full cream milks. Nevertheless, the long-term trend in this category resumed the following year with full cream white milk volumes again losing share in a growing market to settle marginally below 49% share of total drinking milk in 2011/12. The trends across the other segments were mixed; with total modified milks up 6% and fresh flavoured milks up 3% for the year; while UHT milk volumes were flat. The recent absence of growth in UHT milk, after a couple of years of strong growth, is thought to be due to the aggressive pricing of private label fresh milk products by the major supermarket chains down to the $1 per litre seen for UHT milk when on promotion.
There are now just two major players in the Australian drinking milk market: the enlarged Lion—Dairy & Drinks (formerly National Foods)—after their takeover of the Dairy Farmers Group in late-2008—(with the Pura and Dairy Farmers brands) and Parmalat (with the Pauls brand). Nevertheless, there are also a number of smaller players in the marketplace with strong regional brands and showing significant growth in recent years.
The supermarket channel’s share of Australian drinking milk sales has continued to trend steadily up over recent years—to 52.7% in 2011/12. In late-January 2011 the supermarket channel saw an outbreak of ‘milk price wars’ as one of the major chains reduced its private label milk price to just $1 per litre. This was immediately followed by all major supermarket competitors and has led to further shifting of sales from convenience and other outlets to supermarkets.
Supermarket sales volumes grew by 3.5% in 2011/12; with the comparative sales performance between branded milks (-1.0%) and private label milks (+7.9%) delivering share growth to private label milks of 2.2% share points to 53.5%.
Drinking Milk Sales by Type (Million Litres)
While private label brands account now for 53.5% of total supermarket milk volumes, up from around 25% back in 1999/2000, market value is little changed over the last year. The average price of private label products is significantly less than company branded products; due to a combination of product and pack size mix—with a greater proportion of private label purchases being larger plastic bottles of regular full cream milk.
On the packaging front, plastic bottles now account for around 80% of all milk sales in supermarkets, with the balance split evenly between gable-top cartons and UHT packs.
There have been significant movements within the pack sizes bought by consumers in supermarkets over the last decade. While the 2-litre plastic bottle remains the most popular size, with 43% share, this is down from close to 50% nine years ago. Similarly, the combined share of 1-litre cartons and plastic bottles has slipped from 33% to 18%. The major change has been in the rapid growth of the 3-litre plastic bottle, increasing its share of all supermarket milk sales from 13% when it first appeared in June 1998, to around 33% currently.
In 2011/12, the average price of branded milk increased marginally from $2.11 to $2.13 per litre. When combined with a further 6% decrease (after a 9% decrease last year) in the average private label price down to $1.04 per litre, these developments delivered another fall in the average supermarket price of 5 cents per litre down to $1.55 per litre.
This has been due to the impact of price reductions since late-January 2011.
Australia exports relatively small volumes of milk—predominantly as UHT product—with over 85% of the total going into the Asian region and most of the balance into the island countries of the Pacific region.
Drinking Milk Sales by State (Million Litres)
Source: Milk processors and State Milk Authorities
Further ReadingYou can view the full report by clicking here.