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Who dairies wins

Changes in disposable income have minimal effects on demand for milk. However, an increase in incomes does stimulate demand for flavoured milk, yoghurt and other dairy products.

IBISWorld forecasts that in 2008-09 the milk and cream processing industry will achieve revenue of $4,048.6 million, which will represent industry revenue growth of 6.8%. IBISWorld also expect this industry to contribute $852.3 million to the Australian economy, which will increase by 5.8% from the previous year.

Consumer concerns over fat content, and the unhealthy nature of some dairy based foods, have had an adverse effect on the demand for traditional products such as cream. In recent years, the dairy industry has been promoting the nutritional value of dairy products as a source of calcium and in helping to prevent diseases such as osteoporosis.

Milk substitutes such as soy milk pose an increasing threat to the dairy industry as consumers become more health conscious and informed. Unlike dairy milk, soy milk contains fibre, is a good source of protein, is low in saturated fat and cholesterol free.

Dairy processors have introduced new products such as low-fat, pro-biotic, low GI, snack yoghurt packs and vitamin enhanced drinking milk in order to attract health conscious consumers.

Technological advances in ultra filtration techniques, combined with increased consumer demands for healthy, low-fat products has seen a growth in the relative importance of reduced fat milk products as opposed to the traditional fresh full cream white milk. Recent years have also seen the introduction of a variety of flavoured milks into the impulse beverage market to compete with soft drink and fruit juice products. In 2004-05, the consumption of flavoured milks accounted for almost 10% of all packed milk sold in Australia.

Over the next five years, industry revenue growth will depend on increased production and stronger export opportunities. Growth of around 7% is expected in 2008-09 as the total milk production and milk sales are anticipated to increase.

Industry revenue is anticipated to be affected by seasonal conditions, international dairy prices, the cost of fodder and grain, technological innovation in milk and cream processing, new product development and the perceived nutritional value of dairy products, in addition to further trade liberalisation.

Lena Zak is the editor of Food Magazine.

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