Australian Dairy Industry: Growth, Challenges, and Opportunities
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This report explores the growth, challenges, and opportunities in the Australian dairy industry. It includes an overview of the industry, Porter's Five Forces analysis, and recommendations for improvement. The report also discusses an emerging product in the industry and its potential for success.
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Running Head: FOOD MARKETTING 0
Food Marketing
JULY 29, 2018
Food Marketing
JULY 29, 2018
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FOOD MARKETTING 1
Executive summary
Australian dairy industry is one of the leading industry and enhanced profitability and
revenue over time. In terms of rank, the country has been ranked as third, and there were
many competitors and the other suppliers in the market. The aim of the dairy industry is to
increase profits and profitability to enhance goodwill and reach every customer. A number of
substitutes created problems in the dairy industry, which led to the change in the working of
the industry. The industry depicted a high bargaining power, i.e. a research was carried out on
the porter’s five forces of the dairy industry. Therefore, the industry is growing and
expanding towards enhancing the exports with other nations, serving the needs worldwide.
The method used were the porter five forces analysis, and the company is suggested to revise
strategies and the methods of production to improve productivity.
Executive summary
Australian dairy industry is one of the leading industry and enhanced profitability and
revenue over time. In terms of rank, the country has been ranked as third, and there were
many competitors and the other suppliers in the market. The aim of the dairy industry is to
increase profits and profitability to enhance goodwill and reach every customer. A number of
substitutes created problems in the dairy industry, which led to the change in the working of
the industry. The industry depicted a high bargaining power, i.e. a research was carried out on
the porter’s five forces of the dairy industry. Therefore, the industry is growing and
expanding towards enhancing the exports with other nations, serving the needs worldwide.
The method used were the porter five forces analysis, and the company is suggested to revise
strategies and the methods of production to improve productivity.
FOOD MARKETTING 2
Contents
Executive summary..................................................................................................................1
Introduction..............................................................................................................................3
Overview of the Dairy Industry................................................................................................3
Porter’s Five Forces of Australian’s Dairy Industry.................................................................4
Recommendations....................................................................................................................6
Conclusion................................................................................................................................6
References............................................................................................................................7
Contents
Executive summary..................................................................................................................1
Introduction..............................................................................................................................3
Overview of the Dairy Industry................................................................................................3
Porter’s Five Forces of Australian’s Dairy Industry.................................................................4
Recommendations....................................................................................................................6
Conclusion................................................................................................................................6
References............................................................................................................................7
FOOD MARKETTING 3
Introduction
Food is a fundamental need of every human and it is essential part of our daily lives. It has an
important role in terms of social and economic aspects. Preparing, and sharing of the food is a
part of the family life, culture and the values of the society. Australia is a major food
producer and the trading nation that exports 70% of the agricultural production. Food
processing is the Australia’s largest manufacturing industry. It is the small producer of milk
and the dairy industry is Australia’s third largest rural industry (Australian government,
2018). There are numerous segments of the food industry of Australia such as dairy,
agricultural and fisheries, seafood and meat. The report discusses about their growth,
challenges, and opportunities in the near future (Santacruz, 2016).
Overview of the Dairy Industry
Australia produces a range of dairy products that include milk, milk powder, yoghurt, butter,
and cheese. The dairy industry of Australia is situated in the southeast of Australia; Victoria
is the largest production state. The dairy industry is highly dependent on the availability of
water, and the industry employs around 42,100 people. The importance of the dairy industry
of Australia has increased over years as it ranks third behind the beef and the meat industry.
The dairy market is open to the trade with the other international markets, and is at the fourth
position in terms of world dairy trade which represents the Australian dairy industry as one of
the emerging industry.
The dairy manufacturing sector of the Australian food industry is diverse, adapts to the
climatic changes and operates at both the level i.e. private and the public (Soufiyan and
Aghbashlo, 2017). Yogurts in the industry have shown the considerable growth over the past
two decades. In addition, there has been a growth in imports for the purpose of local
consumption (Silanikove and Koluman, 2015).
Although the Australian dairy industry is a large size organisation depicted a high growth rate
and profitability over years, but there are certain barriers and drivers, which either progresses
the growth or reduces the profits. The operations carried in the industry faced some barriers
and distortions, these include unfair administered tariff quota, restriction to access. Along
with the barriers, there are some drivers in the dairy industry that affects the performance,
Introduction
Food is a fundamental need of every human and it is essential part of our daily lives. It has an
important role in terms of social and economic aspects. Preparing, and sharing of the food is a
part of the family life, culture and the values of the society. Australia is a major food
producer and the trading nation that exports 70% of the agricultural production. Food
processing is the Australia’s largest manufacturing industry. It is the small producer of milk
and the dairy industry is Australia’s third largest rural industry (Australian government,
2018). There are numerous segments of the food industry of Australia such as dairy,
agricultural and fisheries, seafood and meat. The report discusses about their growth,
challenges, and opportunities in the near future (Santacruz, 2016).
Overview of the Dairy Industry
Australia produces a range of dairy products that include milk, milk powder, yoghurt, butter,
and cheese. The dairy industry of Australia is situated in the southeast of Australia; Victoria
is the largest production state. The dairy industry is highly dependent on the availability of
water, and the industry employs around 42,100 people. The importance of the dairy industry
of Australia has increased over years as it ranks third behind the beef and the meat industry.
The dairy market is open to the trade with the other international markets, and is at the fourth
position in terms of world dairy trade which represents the Australian dairy industry as one of
the emerging industry.
The dairy manufacturing sector of the Australian food industry is diverse, adapts to the
climatic changes and operates at both the level i.e. private and the public (Soufiyan and
Aghbashlo, 2017). Yogurts in the industry have shown the considerable growth over the past
two decades. In addition, there has been a growth in imports for the purpose of local
consumption (Silanikove and Koluman, 2015).
Although the Australian dairy industry is a large size organisation depicted a high growth rate
and profitability over years, but there are certain barriers and drivers, which either progresses
the growth or reduces the profits. The operations carried in the industry faced some barriers
and distortions, these include unfair administered tariff quota, restriction to access. Along
with the barriers, there are some drivers in the dairy industry that affects the performance,
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FOOD MARKETTING 4
growth and the food safety in the industry. These drivers include the inputs, global demand,
and supply, economy, Australian market and the exchange rates (Lower and Pollock, 2017).
The chart and the diagrams below represent the Australia’s Dairy industry growth trend and
the details about the export and the production. The next describing about the registered dairy
farms, and these also represents the dairy industry as growing or emerging in the Australian
market.
(Source: Rayner, Tan, and Ward, 2008)
growth and the food safety in the industry. These drivers include the inputs, global demand,
and supply, economy, Australian market and the exchange rates (Lower and Pollock, 2017).
The chart and the diagrams below represent the Australia’s Dairy industry growth trend and
the details about the export and the production. The next describing about the registered dairy
farms, and these also represents the dairy industry as growing or emerging in the Australian
market.
(Source: Rayner, Tan, and Ward, 2008)
FOOD MARKETTING 5
(Source: The Conversation, 2013)
Porter’s Five Forces of Australian’s Dairy Industry
Porter’s five forces is a framework that helps to identify and analyse the competitive
environment of an industry or a market. The table brings out the analysis of the five forces
describing about the scenario of the Australia’s dairy industry (Fern Fort University, 2018).
Factors Notes
1. Threat of New Entry With the entrance of new firms in the tobacco, food, and
beverage industry, the firms use new and innovative
methods of production. This in turn puts the pressure on
the Australian’s Dairy farms through lowering the price
of the products. As the Australian milk product and
dairy market is large, therefore there is always a threat
of new companies launched in the industry. Hence, there
are many barriers to their entry by the Australian
government.
2. Substitutes As when a new product or a service fulfils the similar
customer needs, the industry suffer in terms of
profitability. The country faces the threat of substitute
products as it accounts for 2% of the world’s dairy
(Source: The Conversation, 2013)
Porter’s Five Forces of Australian’s Dairy Industry
Porter’s five forces is a framework that helps to identify and analyse the competitive
environment of an industry or a market. The table brings out the analysis of the five forces
describing about the scenario of the Australia’s dairy industry (Fern Fort University, 2018).
Factors Notes
1. Threat of New Entry With the entrance of new firms in the tobacco, food, and
beverage industry, the firms use new and innovative
methods of production. This in turn puts the pressure on
the Australian’s Dairy farms through lowering the price
of the products. As the Australian milk product and
dairy market is large, therefore there is always a threat
of new companies launched in the industry. Hence, there
are many barriers to their entry by the Australian
government.
2. Substitutes As when a new product or a service fulfils the similar
customer needs, the industry suffer in terms of
profitability. The country faces the threat of substitute
products as it accounts for 2% of the world’s dairy
FOOD MARKETTING 6
production. The customer’s preference for the
“vegetable based substitutes” has been increased over
time due to higher prices of dairy products. The
substitutes can be frozen foods, ice creams, and milk.
Therefore, the dairy industry can improve the situation
by being service oriented rather than just product
oriented.
3. Competitive Rivalry In the case when the rivalry among the existing players
in an industry is high, it leads to decrease in prices and
hence the overall profitability of the sector. The
Australian dairy industry faces stiff competition at both
the international and the national level.
4. Bargaining power of
suppliers
All the firms in the food and the dairy industry obtain
raw materials from the suppliers, who being in a
dominant position can affect the earnings of the
company. The Australian Dairy industry maintains a
healthy relation with their suppliers because of the high
purchasing power. Hence, the bargaining power of
suppliers in this industry is high as the famers are in a
position to supply their items to the multiple buyers
(Grindlay, 2014)
5. Bargaining power of
buyers
The milk processing companies and the dairy
manufacturing sectors in the food industry, have
considerably high bargaining powers due to the
availability of large number of substitutes. The dairy
industry of Australia can reduce the bargaining power of
buyers by building a large customer base and
introducing new products in the market (Dairy Australia,
2018).
production. The customer’s preference for the
“vegetable based substitutes” has been increased over
time due to higher prices of dairy products. The
substitutes can be frozen foods, ice creams, and milk.
Therefore, the dairy industry can improve the situation
by being service oriented rather than just product
oriented.
3. Competitive Rivalry In the case when the rivalry among the existing players
in an industry is high, it leads to decrease in prices and
hence the overall profitability of the sector. The
Australian dairy industry faces stiff competition at both
the international and the national level.
4. Bargaining power of
suppliers
All the firms in the food and the dairy industry obtain
raw materials from the suppliers, who being in a
dominant position can affect the earnings of the
company. The Australian Dairy industry maintains a
healthy relation with their suppliers because of the high
purchasing power. Hence, the bargaining power of
suppliers in this industry is high as the famers are in a
position to supply their items to the multiple buyers
(Grindlay, 2014)
5. Bargaining power of
buyers
The milk processing companies and the dairy
manufacturing sectors in the food industry, have
considerably high bargaining powers due to the
availability of large number of substitutes. The dairy
industry of Australia can reduce the bargaining power of
buyers by building a large customer base and
introducing new products in the market (Dairy Australia,
2018).
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FOOD MARKETTING 7
Emerging product in the dairy industry
The Australian dairy industry has been growing continuously and has reported huge profits
and success since years. Australia has a well-earned reputation for producing natural and
high-quality dairy products. Therefore, the industry has been assessed for the key challenges
and opportunities to emerge as the most successful in future. For the purpose of gaining an
Opportunities Threats
Management of production risk, and
there is an increased demand from
Asian countries of their products and
services.
There were growth opportunities in
various products categories, and the
domestic market growth is expected to
rise gradually.
The dairy market is growing at a large
pace, and the growth in this sector is
driven by the change in dietary
patterns.
In addition, there were introduction of
dairy components in innovative food
functional foods and other varieties.
There were expansions in other
commercially viable market access
opportunities.
The industry at Australia has been
growing over time as it caters to the
diverse needs and culture.
Despite the growth and significant role in
the Australian’s economy, the dairy and
the agriculture industry faced some
challenges across the whole supply chain
(Department of Agriculture and Water
resources, 2018).
Some of the challenges relate to the
production sector, which means at the
farm level, the production of milk is
slow.
The key challenges at the farm level
include the rebuilding of the national
herd size, despite the fall in the numbers
of cow.
To understand and analyse the
implications of the new technologies on
the Australia’s international cost
competitiveness and profitability of the
farm.
There are some technical challenges such
as technical access barriers including bio-
security and the competition from the
non-dairy substitutes (Pwc, 2018).
Emerging product in the dairy industry
The Australian dairy industry has been growing continuously and has reported huge profits
and success since years. Australia has a well-earned reputation for producing natural and
high-quality dairy products. Therefore, the industry has been assessed for the key challenges
and opportunities to emerge as the most successful in future. For the purpose of gaining an
Opportunities Threats
Management of production risk, and
there is an increased demand from
Asian countries of their products and
services.
There were growth opportunities in
various products categories, and the
domestic market growth is expected to
rise gradually.
The dairy market is growing at a large
pace, and the growth in this sector is
driven by the change in dietary
patterns.
In addition, there were introduction of
dairy components in innovative food
functional foods and other varieties.
There were expansions in other
commercially viable market access
opportunities.
The industry at Australia has been
growing over time as it caters to the
diverse needs and culture.
Despite the growth and significant role in
the Australian’s economy, the dairy and
the agriculture industry faced some
challenges across the whole supply chain
(Department of Agriculture and Water
resources, 2018).
Some of the challenges relate to the
production sector, which means at the
farm level, the production of milk is
slow.
The key challenges at the farm level
include the rebuilding of the national
herd size, despite the fall in the numbers
of cow.
To understand and analyse the
implications of the new technologies on
the Australia’s international cost
competitiveness and profitability of the
farm.
There are some technical challenges such
as technical access barriers including bio-
security and the competition from the
non-dairy substitutes (Pwc, 2018).
FOOD MARKETTING 8
awareness of the dairy products or farms in a better way, various aspects have been included
in the assignment. Australia has a well-earned reputation for the production of natural and
high-quality dairy products. Extensive products of the Australian dairy industry include
specialised soft and hard cheese, wide variety of natural and fruit yoghurts, spreads, healthy
dips, butter, cultured milk drinks and several others.
The dairy products include, cheese, natural and fruit yogurt, healthy dips and spread, butter,
cultured milk drinks and many others. The emerging sector or company in this industry has
been as the Bega cheese company located in the town Bega, New South Wales, Australia. It
was found as an agricultural cooperative owned by the dairy suppliers, but later on
established as a public company after getting listed on Australia Securities Exchange. Bega
Cheese is considered as the largest dairy companies in the Australia, with huge revenues. As
cheese has consistently become the major product stream in this industry, therefore the main
product of the Bega cheese company includes cheese, yogurt, spreads, grocery, and bio-
nutrients. The company is dealing in the manufacturing or introducing a new product “ice-
cream”. Bega Cheese limited has a long and unique history that started the beginning of
stepping stones of success of the company. The name of the Bega stands for quality, and
integrity and serves the Australian values. Ice-cream as a different product with the company
to be introduced with the aim of catering the new emerging requirements of the people of the
country. Going beyond the standard flavours of vanilla, chocolate, and strawberry, some
other flavours also need to be introduced in order to be innovative. These new flavours will
include cinnamon horchata, blueberry passion fruit, and chocolate mascarpone. Therefore,
upbringing the production of a new product in the dairy industry will boost the sales and
growth of the company ensuring long-term success.
Recommendations
The dairy industry at Australia should set priorities towards the improvement of export trade
policies that will further bring opportunities and options for the Australian exporters.
Moreover, the industry should encourage the employees and management to involve in the
multilateral trade agreements with the WTO.
awareness of the dairy products or farms in a better way, various aspects have been included
in the assignment. Australia has a well-earned reputation for the production of natural and
high-quality dairy products. Extensive products of the Australian dairy industry include
specialised soft and hard cheese, wide variety of natural and fruit yoghurts, spreads, healthy
dips, butter, cultured milk drinks and several others.
The dairy products include, cheese, natural and fruit yogurt, healthy dips and spread, butter,
cultured milk drinks and many others. The emerging sector or company in this industry has
been as the Bega cheese company located in the town Bega, New South Wales, Australia. It
was found as an agricultural cooperative owned by the dairy suppliers, but later on
established as a public company after getting listed on Australia Securities Exchange. Bega
Cheese is considered as the largest dairy companies in the Australia, with huge revenues. As
cheese has consistently become the major product stream in this industry, therefore the main
product of the Bega cheese company includes cheese, yogurt, spreads, grocery, and bio-
nutrients. The company is dealing in the manufacturing or introducing a new product “ice-
cream”. Bega Cheese limited has a long and unique history that started the beginning of
stepping stones of success of the company. The name of the Bega stands for quality, and
integrity and serves the Australian values. Ice-cream as a different product with the company
to be introduced with the aim of catering the new emerging requirements of the people of the
country. Going beyond the standard flavours of vanilla, chocolate, and strawberry, some
other flavours also need to be introduced in order to be innovative. These new flavours will
include cinnamon horchata, blueberry passion fruit, and chocolate mascarpone. Therefore,
upbringing the production of a new product in the dairy industry will boost the sales and
growth of the company ensuring long-term success.
Recommendations
The dairy industry at Australia should set priorities towards the improvement of export trade
policies that will further bring opportunities and options for the Australian exporters.
Moreover, the industry should encourage the employees and management to involve in the
multilateral trade agreements with the WTO.
FOOD MARKETTING 9
Conclusion
To conclude the above discussion, there is a growth and opportunities, in the dairy sector of
the Australia food industry. Despite the strengths, weaknesses the industry has a wide
popularity and operates at both the levels. It means both the public and the private sector
governs the functioning of the firms. Among all the products, in the dairy industry yogurts
have been considerably growing, yielding profits to the industry. Therefore, the industry
should consider growth and other aspects, fulfilling consumer needs at a larger level by
revising the methods of production, and overcoming the trade barriers.
Conclusion
To conclude the above discussion, there is a growth and opportunities, in the dairy sector of
the Australia food industry. Despite the strengths, weaknesses the industry has a wide
popularity and operates at both the levels. It means both the public and the private sector
governs the functioning of the firms. Among all the products, in the dairy industry yogurts
have been considerably growing, yielding profits to the industry. Therefore, the industry
should consider growth and other aspects, fulfilling consumer needs at a larger level by
revising the methods of production, and overcoming the trade barriers.
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FOOD MARKETTING 10
References
Australian government (2018) Dairy Industry. [online] Available from:
http://www.agriculture.gov.au/abares/research-topics/surveys/dairy [Accessed 31/07/18].
Dairy Australia (2018) Investment and the Australian Dairy Industry. [online] Available
from: https://www.dairyaustralia.com.au/about-dairy-australia/about-the-industry/investment-
and-the-australian-dairy-industry [Accessed 31/07/18].
Department of Agriculture and Water resources (2018) Dairy. [online] Available from:
http://www.agriculture.gov.au/SiteCollectionDocuments/about/factsheets/dairy.pdf
[Accessed 31/07/18].
Fern Fort University (2018) Australian Dairy farms Group Porter Five Forces Analysis.
[online] Available from: http://fernfortuniversity.com/term-papers/porter5/asx/632-australian-
dairy-farms-group.php [Accessed 31/07/18].
Grindlay, D. (2014) Dairy farmers read up on collective bargaining as power dynamic
between suppliers and buyers shifts. [online] Available from:
http://www.abc.net.au/news/rural/2014-11-24/dairy-farmers-armed-with-new-guidebook-to-
negotiate-fair-milk-p/5914284 [Accessed 31/07/18].
Lower, T. and Pollock, K. (2017) Financial considerations for health and safety in the
Australian dairy industry. Journal of agromedicine, 22(2), pp. 131-139.
Pwc (2018) The Australian Dairy Industry: The Basics [online] Available from:
https://www.pwc.com.au/industry/agribusiness/assets/australian-dairy-industry-nov11.pdf
[Accessed 31/07/18].
Rayner, V., Tan, N., and Ward, N. (2010). Trends in farm sector output and exports.
Retrieved from: https://www.rba.gov.au/publications/bulletin/2010/dec/1.html
Santacruz, S. (2016) Food Industry Sectors in Australia. [online] Available from:
https://www.foodsafety.com.au/resources/articles/food-industry-sectors-in-australia
[Accessed 31/07/18].
Silanikove, N. and Koluman, N. (2015) Impact of climate change on the dairy industry in
temperate zones: predications on the overall negative impact and on the positive role of dairy
goats in adaptation to earth warming. Small Ruminant Research, 123(1), pp. 27-34.
References
Australian government (2018) Dairy Industry. [online] Available from:
http://www.agriculture.gov.au/abares/research-topics/surveys/dairy [Accessed 31/07/18].
Dairy Australia (2018) Investment and the Australian Dairy Industry. [online] Available
from: https://www.dairyaustralia.com.au/about-dairy-australia/about-the-industry/investment-
and-the-australian-dairy-industry [Accessed 31/07/18].
Department of Agriculture and Water resources (2018) Dairy. [online] Available from:
http://www.agriculture.gov.au/SiteCollectionDocuments/about/factsheets/dairy.pdf
[Accessed 31/07/18].
Fern Fort University (2018) Australian Dairy farms Group Porter Five Forces Analysis.
[online] Available from: http://fernfortuniversity.com/term-papers/porter5/asx/632-australian-
dairy-farms-group.php [Accessed 31/07/18].
Grindlay, D. (2014) Dairy farmers read up on collective bargaining as power dynamic
between suppliers and buyers shifts. [online] Available from:
http://www.abc.net.au/news/rural/2014-11-24/dairy-farmers-armed-with-new-guidebook-to-
negotiate-fair-milk-p/5914284 [Accessed 31/07/18].
Lower, T. and Pollock, K. (2017) Financial considerations for health and safety in the
Australian dairy industry. Journal of agromedicine, 22(2), pp. 131-139.
Pwc (2018) The Australian Dairy Industry: The Basics [online] Available from:
https://www.pwc.com.au/industry/agribusiness/assets/australian-dairy-industry-nov11.pdf
[Accessed 31/07/18].
Rayner, V., Tan, N., and Ward, N. (2010). Trends in farm sector output and exports.
Retrieved from: https://www.rba.gov.au/publications/bulletin/2010/dec/1.html
Santacruz, S. (2016) Food Industry Sectors in Australia. [online] Available from:
https://www.foodsafety.com.au/resources/articles/food-industry-sectors-in-australia
[Accessed 31/07/18].
Silanikove, N. and Koluman, N. (2015) Impact of climate change on the dairy industry in
temperate zones: predications on the overall negative impact and on the positive role of dairy
goats in adaptation to earth warming. Small Ruminant Research, 123(1), pp. 27-34.
FOOD MARKETTING 11
Soufiyan, M.M. and Aghbashlo, M. (2017) Application of exergy analysis to the dairy
industry: A case study of yogurt drink production plant. Food and Bioproducts
Processing, 101, pp. 118-131.
The Conversation. (2013). Cooperation versus Investor Returns- the future of Dairy farming
in Australia. Retrieved from: https://theconversation.com/cooperation-versus-investor-
returns-the-future-of-dairy-farming-in-australia-20679
Soufiyan, M.M. and Aghbashlo, M. (2017) Application of exergy analysis to the dairy
industry: A case study of yogurt drink production plant. Food and Bioproducts
Processing, 101, pp. 118-131.
The Conversation. (2013). Cooperation versus Investor Returns- the future of Dairy farming
in Australia. Retrieved from: https://theconversation.com/cooperation-versus-investor-
returns-the-future-of-dairy-farming-in-australia-20679
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