Major dairy manufacturers losing ground to private label lines

According to Dairy Australia’s Dairy Situation and Outlook Report, Australians are increasing their spend on gourmet yoghurt, cheeses and dairy spreads, and supermarket private label lines are increasing their market share at the expense of major dairy manufacturers.

The report states that private label brands now hold a 35.9 percent share of the chilled cheese market – up 1.9 percent from the previous period.

 “Major manufacturers have lost share of chilled cheese (branded product) over the latest 12 months while private label sale volume has grown strongly at 7.5 percent: accounting for a little more than the branded volume lost by two of the top three major manufacturers,” the report reads.

The report, which was released yesterday, also highlighted that consumer trends towards higher protein content and ‘indulgent’ products have opened up opportunities for new product developments which are commanding high prices.

"New yoghurt product releases in the latest quarter have capitalised on a combination of wider trends including renewed interest in protein (as opposed to fat levels), natural ingredients and indulgence," the report stated.

The report also found that gourmet deli cheese have increased in popularity with an increase of 5.7 percent, while sales of dairy snacks have dipped slightly.

International demand for dairy is also keeping Australia’s farm gate prices up with a 25 percent increase on last season.

“Global dairy demand remains on a steady footing despite pricing at near record levels and production shortfalls in China and Russia have boosted import demand in those markets,” the report reads. “Southeast Asia is showing steady growth despite localised challenges, and exports to South Korea should benefit from the yet to be ratified Korea-Australia Free Trade Agreement.”

Despite an increase farm gate prices and high demand from international markets, Commercial and Research Analysis Manager at Dairy Australia, Norman Repacholi said that Australian dairy farmers are still facing challenges.

“Producers focussed on Australia’s domestic market have not seen the same, if any jump in milk price as those experienced by dairy producers in export focussed regions. They are also still facing cost pressures as a result of unfavourable weather or tight regional hay and grain supplies,” said Repacholi.


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