Page 37 - Food&Drink magazine April-May 2023

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drinking milk was a significant market for Australia’s dairy industry, hence the health and performance of the category still has an important
role to play in the industry’s profit pool.
In 2021/2022, according to Dairy Australia, Australians consumed more than
2.5 billion litres of drinking milk, approximately 30 per cent of the estimated
8.554 billion litres of raw milk produced in Australia for that year. The remainder went into manufacturing of dairy products and ingredients for domestic and export markets.
BIG ‘DRINKERS’
Australians are big consumers of drinking milk, with Australia’s per capita consumption ranking among the highest in the world.
consumption in Australia contracted by 1.1 per cent or 36 million litres.
This is not a story unique to Australia, however. In many westernised economies, consumption of drinking milk shows a similar trajectory.
Cost-of-living pressures and food price inflation are also providing some near-term headwinds globally, even though the consumption of dairy, including drinking milk, is relatively inelastic.
There are signs of consumers trading down resulting in declines in drinking milk consumption in grocery retail and out-of-home channels.
The long-term dynamics of the drinking milk category in Australia will be difficult to reverse. However, it’s not all bad news for domestic dairy consumption, with consumers
– of mainland China, Hong Kong, Macau and Taiwan – have underpinned this export growth, with China itself the clear stand out.
Total volumes of liquid milk to Greater China have expanded by an average of
25 per cent each year over the past decades.
And while not growing at the same pace as China, export volumes to Southeast Asia have been increasing on average by double digits over the same period.
There has been broad-based growth across South-East Asia, but Singapore, the Philippines, and Malaysia have been stand-out performers for Australian dairy exporters in the region.
Looking forward, there is still plenty of “runway” left for export volumes in these markets, supported by positive “demand and trade settings” in their economies, including an increasing appetite for sustainable nutrition, limitations in
local dairy supply capacity, cost competitiveness of imported milk, and consumer preferences for imported brands.
Key to long-term export success in these markets will be the ability to grow export volumes despite limited growth in Australian milk production, while also maintaining a competitive price point. ✷
✷ ABOUTTHEAUTHOR
“ For dairy farmers, higher consumer prices for milk and dairy products across supermarket aisles is welcome news.
It will solidify the end of frustrations over the discounting of drinking milk.”
The average Australian consumes a large volume of drinking milk, ranking only behind Ireland, Finland, and New Zealand according to the International Dairy Federation.
In 2021/22, Australian per capita consumption of milk stood at 93 litres per person for the year, which equals just over 250 millilitres per day.
Full cream milk is “category king”, equating to 56 per cent of all drinking milk sold in the country.
However, the drinking milk market in Australia is extremely mature and domestic consumption is trending lower as dietary habits shift, a trend that is expected to continue into the medium term.
Dairy Australia figures indicate domestic milk consumption peaked in 2012/13 at 106.7 litres per person and has since fallen by 13 per cent. And in 2021/22, total drinking milk
simply consuming dairy in different forms.
While fluid milk consumption is declining, other categories – such as cheese – continue to grow.
GROWING EXPORTS
Export volumes of Australian liquid /drinking milk have also been growing, with the total volume exported increasing by more than 200 million litres annually over the
past decade.
The Australian liquid
milk export sector has continued to perform strongly in recent years, despite dwindling supply.
In 2021/22, Australia exported more than
380 million litres of packaged milk to offshore markets. Between 2012 and 2022, Australia’s exports of liquid milk grew by an average of
17 per cent each year.
The ‘Greater China’ markets
Michael Harvey is an experienced dairy analyst, with more than 20 years as an analyst, researcher, and advisor. Prior to working at Rabobank he was part of the Trade and Strategy team with Dairy Australia. He has been actively involved in the Australian dairy industry for much of his life, having been raised on a dairy farm in the northern Victorian irrigation district.
www.foodanddrinkbusiness.com.au | April/May 2023 | Food&Drink business | 37