Not crying over spilled milk: Dairy Farmers, Pura & others now Australian owned milk
Iconic Australian company Bega Cheese announced last Thursday that it would purchase Lion Dairy & Drinks – including its brands Pura Milk, Dare Iced coffee and Yoplait yogurt. The $534 million dollar deal will see Japanese giant Kirin relinquish ownership of the products, and lead to an increase in the number of Australian owned milk brands on the market.
It’s a crucial shot in the arm for the nation’s dairy industry, which has struggled in the face of deregulation and drought in recent years. To fund the takeover, Bega will issue an extra $400 million dollars in shares. The farmers that will now supply the brands purchased by Bega are optimistic about the purchase. On the other hand, the average Australian consumer, concerned about giving a fair go to farmers and ensuring adequate Australian ownership of Australia’s $4 billion dairy industry, are cheerful about the move.
It’s the size of the prize that Bega has acquired which is impressive. The purchase will more than double total revenues at the company to 3 billion dollars, all in Australian hands.
It wasn’t always looking so rosy – late last year it took the intervention of the Treasurer, Josh Frydenberg, to stop Lion Dairy from falling into Chinese hands. Mr Frydenberg blocked a 600 million dollar deal with Mengniu Dairy on national interest grounds.
Currently, Bega Cheese sources fresh milk from suppliers around southern New South Wales and parts of Victoria. The acquisition will expand its supply chain to include dairy farmers in Western Australia, South Australia, Tasmania and South-East Queensland.
Notably, the consolidation of these farmers into a bloc could give Bega more negotiating power with supermarket giants like Coles and Woolworths – but it’s unclear if it will see farmers get better prices for their products just yet.
Australian Alternative believe that it’s essential for our audience to know who owns which Dairy Companies in the country. As it currently stands, approximately half of the major milk brands sold in Australia are owned by overseas companies, and around 10% of current dairy products sold in Australia are imported.
As it can often be a challenge to determine which milk brands are Australian owned, we’ve prepared the following infographic below to help you support all things Australian made, owned and grown.
Why buying local & branded matters:
With our farmers struggling, it’s never been so important to buy local and branded dairy items to keep the industry moving. Cheerfully, this message has been one that has resonated with Australian consumers, who have recently been willing to spend a little extra on branded milk, if it means a better quality product and more money in farmers’ pockets.
A perfect example of farmers benefiting this shift in consumer behaviour comes from Norco, one of Australias’ oldest and largest Australian owned dairy cooperatives. In October, Norco made headlines for paying among the highest farmgate price per litre of milk in Australia, at an average 70c per litre. For context, Farmgate prices per litre offered by major retail chains average around 50c per litre.
Not only that, a shift in consumer preferences coupled with increased demand has led to Norco branded fresh milk now becoming available in an additional 390 Coles stores across New South Wales and Queensland.
“We can’t thank our customers enough for their overwhelming support, and their purchase power has resulted in more product availability which supports farmers and allows more to experience the high-quality farm-fresh difference that has made Norco famous for the last 125 years.”
Norco CEO Michael Hampson has said in a previous interview.
Buying branded items is crucial. In recent years, Woolworths and Coles have created their own “no-brand” items and used them to undercut Australian companies and farmers. Often, these products are priced just below the Australian equivalent, and these razor-thin margins often lead to farmers’ struggling to break even.
Bega’s acquisition will turn it into an Agriculture giant in Australia, and increases the presence of Australian owned milk on supermarket shelves. Let’s hope some of the benefits get passed onto our farmers too.