Milk production was on the decline between 2018 and 2019 due to drought, rising feed costs and bushfires, resulting in overall lower demand for cow’s milk in the latter year. However, demand for fresh milk (driven by the largest volume category of full fat fresh milk) through retail increased going into 2020 due to more favourable weather conditions and higher farmgate milk prices, and was given a boost in Q2 as the pandemic emerged.
Parmalat Australia Pty Ltd retained its overall lead of drinking milk products in Q2 due to its strong presence in the largest category of cow’s milk with a wide range of brands including Pauls, Zymil and Gippy, combined with new product launches. Its Oak flavoured milk drink launched a confectionery flavoured line in collaboration with Nestlé, which included flavour variants Jaffas, Red Skins, and Chokito for a limited time in late 2019.
Modern grocery retailers strengthened its dominance in terms of distributing drinking milk products in Q2, being deemed essential businesses during lockdown. Despite marginal share gain and stronger current value growth, e-commerce however, remained a small channel for drinking milk products, with many consumers preferring to purchase fresh cow’s milk in particular themselves from refrigerated cabinets.
Demand for drinking milk products is set to record only marginal growth in retail volume terms in 2021, with a predicted surge in foodservice. Cafés and restaurants in Australia were permitted to start reopening later in May 2020, and local consumers are likely to continue to head to these foodservice outlets into the forecast period after being confined to their homes during lockdown to meet up with friends or simply enjoy a freshly-prepared hot beverage from a specialist coffee shop.
The focus of innovation within drinking milk is set to continue to lean towards health, not only in milk alternatives but within other drinking milk products such as fortified or prebiotic cow’s milk as offered by Dairy Farmers, or reduced sugar content within flavoured milk drinks. Up&Go from The Sanitarium Health Food Co offers a no added sugar range and has received a 5-star health rating, and is promoted as a “liquid breakfast” which makes it an attractive option for busy consumers.
With environmental concerns increasingly influencing consumers’ purchasing decisions, Australian manufacturers are likely to continue to strive to improve the sustainability of their packaging. Brownes Dairy for instance, had already announced in late 2019 that it would replace its traditional milk cartons with fully renewable materials, making it not only Australia’s first dairy company to follow this strategy, but also the world’s first fully renewable beverage carton.
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Understand the latest market trends and future growth opportunities for the Drinking Milk Products industry in Australia with research from Euromonitor International's team of in-country analysts – experts by industry and geographic specialisation.
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This report originates from Passport, our Drinking Milk Products research and analysis database.
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