Milk prices experienced historic highs over 2007 and 2008, which considerably aided revenue growth.
Los Angeles, CA (PRWEB) August 02, 2012
Unprecedented volatility in the international dairy market and the onset of the global financial crisis has had a significant impact on the fortunes of the Global Milk and Cream Manufacturing industry. Economic growth and rising affluence from the growing economies of Asia, South America and the Middle East led to a rapid increase in demand for milk and dairy products. This was combined with falling supplies from traditional milk exporters such as Australia and New Zealand due to adverse climatic conditions and high feed costs. Consequently, milk prices experienced historic highs over 2007 and 2008, which considerably aided revenue growth. The onset of the global recession in late 2008 reversed this situation dramatically, with waning demand conditions and significant declines in milk prices. In the five years through 2012, industry revenue is estimated to decrease an annualized 1.2% to total $159.3 billion, according to IBISWorld industry analyst Naren Sivasailam.
The European Union has the highest milk production in the world, with fluid milk production of 34 million metric tons. This is largely because of improvements in feeding, disease control and advancements in breeding. India is the next largest producer when including its milk production from buffalo, followed by the United States, and at quite a large leap down, China. The four major players in this industry are Nestle, Fonterra, Dairy Farmers USA and Dean Foods, and together they account for less than half of industry revenue. In addition, there are a large number of other significant players in this industry including multinational food corporations and medium-size regional dairy cooperatives such as Foremost Farms USA, Associated Milk Producers Inc. and Northwest Dairy Association. In 2012, industry revenue is expected to increase by 0.6%, Sivasailam says.
Over the next five years, the industry's prospects will be tied to the assumed recovery in global economic conditions, domestic seasonal conditions in major exporting countries, and product innovation. Further, the availability of pasture and feed costs, environmental costs of dairy production and trade liberalization policies will also affect the fortunes of the industry. Over the five years through 2017, IBISWorld forecasts that industry revenue will increase.
Milk and cream product manufacturing is undertaken by a diverse range of private companies, public companies, dairy cooperatives and multinational food corporations. The four major players in the Global Milk and Cream Manufacturing industry control about a quarter of the market combined. The industry is highly price competitive with low to moderate profit margins made on the industry's products. Manufacturers may focus their operations in one particular commodity, such as fluid milk, or they may diversify their activities and manufacture a range of milk and cream products. Although there has been a degree of consolidation within this industry in the past decade, the industry is likely to remain highly fragmented over the next five years, especially as the industry continues to be heavily protected. For more information, visit IBISWorld’s Global Milk & Cream Manufacturing industry report page.
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IBISWorld industry Report Key Topics
This industry consists of establishments mainly engaged in grading, filtering and chilling fresh liquid whole milk or cream, or manufacturing, bottling or cartoning pasteurized liquid whole milk, flavored liquid whole or skim milk, liquid skim milk, liquid standardized milk, milk powder, cream, sour cream, or buttermilk.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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