Commodity price volatility has been a double-edged sword for the industry
Melbourne, Australia (PRWEB) December 12, 2012
The Cheese Manufacturing industry has faced turbulent conditions. According to IBISWorld Industry analyst Ryan Lin, “unprecedented commodity price volatility has been the main driver of both industry fortunes and woes”. Global dairy prices reached near-record highs over 2007-08 and cheese prices rose substantially. This increase largely resulted from growth in dairy demand from the growing economies of South Asia, coupled with crippling drought conditions across most of Australia and New Zealand, which resulted in dramatic supply shortages and price increases. This significantly inflated industry revenue and export values over the past five years – until the global financial crisis reversed the trend. Falling domestic and global dairy demand, combined with increased production in response to higher farm gate prices, led to declines in dairy and cheese prices. Domestic total cheese consumption increased by a marginal rate over the past five years, while production volumes have varied by cheese type. Over the past five years, industry revenue is estimated to have increased at an annualised rate of 0.4% to total $4.32 billion, with 0.8% growth in 2012-13.
Over the five years through 2017-18, industry prospects are expected to be relatively bright. “Growth will be mainly driven by a forecast economic recovery, stable dairy product prices and resurgence in demand from the developing world”, says Lin. This would ultimately lead to the sustainable and continual growth of the Cheese Manufacturing industry in Australia. Product and packaging innovations in the form of functional, gourmet and health-based cheese products are also expected to generate renewed interest in a mature market, with demand stemming from the healthy eating movement, and premiumisation and convenience trends. In addition, the industry needs to be wary of environmental and regulatory constraints imposed by various domestic and international agencies, especially with regard to import tariffs and sustainability.
The major players in the Cheese Manufacturing industry are Murray Goulburn, Lion, Bega Cheese, and Fonterra. There are also some medium-size players in the industry that account for a small proportion of revenue, along with smaller operators in niche markets that produce organic or specialty cheese varieties. The industry has a high level of market share concentration. Industry concentration has increased strongly over the past five years, with Bega Cheese's purchase of the cheese manufacturing assets of Kraft Foods. Further consolidation in the industry may occur, particularly between larger players and smaller players, but it is unlikely to be significant considering the current height of concentration.
For more information, visit IBISWorld’s Cheese Manufacturing report in Australia industry page.
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IBISWorld industry Report Key Topics
This industry includes companies that manufacture cheese.
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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