Melbourne, Australia (PRWEB) February 05, 2015
Over the past five years, the Milk and Cream Processing industry has had to contend with adverse climatic conditions, rising production costs and an increasingly health-conscious marketplace. According to IBISWorld industry analyst Ryan Lin, “there have been dramatic changes in milk prices over the period, largely due to rapidly rising demand from Asian markets.” Numerous adverse conditions have forced industry producers to absorb some of the cost increases, resulting in stagnant profit levels. However, industry players have benefited from product innovations, particularly lower fat and full-cream options that cater to taste and health consciousness. Despite this, the industry faced competitive pressures and tough supply conditions early in the period. Over the five years through 2014-15, industry revenue is estimated to fall at an annualised 0.9%, to reach $ 1.9 billion. The industry’s poor performance over the period has been exaggerated due to a high base year in 2009-10, as the industry rebounded from tough weather conditions. Revenue is forecast to increase by 3.5% in 2014-15, as export opportunities grow.
Rising production in overseas dairy regions has increased competition for the domestic Milk and Cream Processing industry. However, “despite increased competition and the industry’s minor role in the global market, revenue derived from exports has grown due to the increasing demand from emerging Asian markets and the perceived high quality of Australian dairy products,” says Lin. The industry’s future prospects appear positive, due to forecast growth in farmgate milk prices and foreign demand. Milk production is forecast to grow in line with stabilising world milk prices over most of the next five years. Domestic demand will be driven by product innovation, growth in disposable incomes and population growth. Changing consumer consumption trends could also create new opportunities for industry players, as new product segments and markets emerge. Surging demand from Asia is expected to put inflationary pressure on prices and as a result, IBISWorld expects production capacity to increase.
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The Milk and Cream Processing industry has a high level of market share concentration. Australia’s dairy industries have undergone major restructuring in response to the deregulation of milk prices, reduced government assistance and increased exposure to domestic and international market forces. The mergers or acquisitions of several large dairy cooperatives and manufacturing companies, such as Parmalat’s takeover of Harvey Fresh in early 2014, have generally increased the size and efficiency of dairy farms. The industry is expected to become more concentrated over time, as multinational food corporations continue to invest in brand awareness and marketing to increase market share at the expense of smaller players. In addition, pressure from retailing giants wanting more market share will increase acquisition activity, augmenting the level of concentration.
For more information, visit IBISWorld’s Milk and Cream Processing industry in Australia report page.
The Milk and Cream Processing industry primarily pasteurises and separates raw milk to make milk and cream products with varying levels of fat content. The industry excludes the manufacture of cultured buttermilk, flavoured milk (whole and skim), sour cream and yoghurt.
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IBISWorld industry Report Key Topics
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Basis of Competition
Barriers to Entry
Technology & Systems
Regulation & Policy
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