Volatility in commodity prices continues to destabilise the industry.
Melbourne, Australia (PRWEB) December 11, 2013
The Cheese Manufacturing industry has faced turbulent conditions. IBISWorld industry analyst Ryan Lin states “unprecedented commodity price volatility has been the main driver of both industry fortunes and woes.” Global dairy prices reached near-record highs over 2009-10. This increase largely resulted from growth in dairy demand from the growing economies of South-East 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 until the global financial crisis reversed the trend. Falling domestic and global dairy demand, combined with increased production in response to higher farmgate prices, has led to recent declines in dairy and cheese prices. Total cheese consumption in Australia has 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 increase at an annualised rate of 2.0% to total $4.4 billion, with 1.2% growth in 2013-14.
Over the five years through 2018-19, the industry's prospects are expected to be relatively bright, driven by a forecast economic recovery, stability in dairy product prices and resurgence in demand from the developing world. This is likely to lead to sustainable and continual growth in the Cheese Manufacturing industry. According to Lin, “product and packaging innovations in the form of functional, gourmet and healthier cheese products are expected to generate renewed interest in a mature market, with demand stemming from the healthy eating movement, premiumisation and convenience trends.” Emerging Asian markets are expected to be key growth markets over the next five years, especially as the Australian dollar returns to and maintains parity, making exports cheaper. While profitability is expected to face continual troubles from competition, the overall industry size is forecast to grow steadily.
The Cheese Manufacturing industry operates under a medium level of market share concentration. However, industry concentration remains slightly under what would be considered a high level of concentration. There are also a number of medium sized players in the industry that account for a relatively smaller proportion of revenue, along with smaller operators in niche markets that produce organic or specialty cheese varieties. 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 how high concentration already is. With the completion of the Warrnambool Cheese & Butter acquisition, IBISWorld expects industry concentration to move into high bracket. The industry’s major players are Murray Goulburn Co-operative, Lion, Bega Cheese and Fonterra Co-operative Group. 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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