Australia’s two biggest cheese manufacturers, Murray Goulburn Co-operative and Bega Cheese, have been pursuing different growth strategies, with both companies performing well despite tough market conditions.
According to IBISWorld, Murray Goulburn Co-operative and Bega Cheese have faced erratic market conditions over the past five years. While dairy prices have risen due to growing global demand, Australian cheese consumption has slowed, with consumers increasingly adopting healthier lifestyles.
Australian consumers are also favouring quality over quantity, with sales of fresh cheeses such as ricotta and goat cheese increasing over industry staples such as cheddar.
As a result, cheese-manufacturing revenue is expected to decrease by an annualised 0.7 per cent over the five years through 2015-16 to total $5.5 billion. This decline has been slowed by cheese exports increasing at an estimated 10.8 per cent annualised over the same period, to total $1.2 billion, due to increased demand from Asia. To combat the rise in dairy prices and support revenue growth, Australia’s two largest cheese manufacturers have adopted different strategies, such as global expansion and the pursuit of acquisitions.
As one of Australia’s largest cooperative dairy companies, the majority of Murray Goulburn Co-operative’s revenue comes from manufacturing dairy products primarily under the Devondale brand. In terms of cheese manufacturing, Murray Goulburn is expected to outperform the industry, with its cheese manufacturing revenue expected to grow by 2.5 per cent in 2015-16 to $1.2 billion. Murray Goulburn’s industry-related revenue has been aided by the rise in dairy prices over the past five years and growth in international demand.
Bega Cheese produces around 20,000 tonnes of natural cheddar and 50,000 tonnes of value-added cheeses annually. Around 80 per cent of the company’s production is targeted at domestic markets such as supermarket chains and foodservice providers.
The company’s cheese manufacturing revenue is estimated to grow by 2.8 per cent in 2015-16 to $948.5 million. Bega’s business with Tatura Milk, Fonterra and Coles, as well as the company’s long history, has helped it to continue to grow while focusing on the domestic market. IBISWorld anticipates that the alliance with Kraft and outsourcing of marketing to Bonland Dairies have helped Bega to grow its market.
Over the next five years, IBISWorld expects Australian dairy consumption to grow, dairy prices to stabilise, and exports to increase.
“Product innovation, including functional, gourmet and healthier cheeses will help stimulate consumer demand, while a rise in exports to Asian markets will drive international trade,” IBISWorld said. “Both Murray Goulburn and Bega Cheese are well placed to capitalise on these trends.”