Volatile commodity prices have been the main driver of the industry's fortunes and woes.
Melbourne, Australia (PRWEB) February 15, 2015
Operators in the Milk Powder Manufacturing industry in Australia have faced some trying times over the past five years. Volatile commodity prices have been the main driver of the industry's fortunes and woes. Global milk powder prices rose by more than 20.0% during 2013-14, but are expected to fall by 40.0% over the current year, resulting in prices that are lower than five years ago. According to IBISWorld industry analyst Ryan Kerin, “prices rose due to increased demand from growing economies in Asia.” Export prices rose prior to the current five-year period and have remained at high until 2014-15, albeit with significant fluctuations. Over the five years through 2014-15, revenue is forecast to decline at an annualised 4.5% to $1.1 billion. In 2014-15, revenue is forecast to fall by 38.5%, as global milk prices have fallen. More than 70.0% of industry revenue is derived from exports, so changes in the global price of milk powder largely affect industry revenue. Declines in the global price of dairy price be tempered by the depreciating Australian dollar.
The industry's prospects for the next five years are relatively bright. Industry performance will be largely driven by rising demand for dairy products in Asia, and falling trade barriers. “The rising wealth of the middle class in Asia is expected to drive demand for industry products, and lower trade barriers will make Australian dairy more profitable,” says Kerin. In 2014, Australia signed trade agreements with Japan, Korea and China. The deal with China is expected to be the most lucrative for the industry; since New Zealand signed a similar deal in 2008, their milk powder exports to China have increased eight-fold. The industry displays a medium level of market share concentration. Major players include Fonterra Co-operative Group Limited and Murray Goulburn Co-operative Co Limited.
Dairy product prices are volatile and further fluctuations in prices cannot be ruled out, so the Milk Powder Manufacturing industry is expected to remain volatile. The industry will face strong competition in global markets, especially from growth in milk powder production in New Zealand, the world's largest dairy product exporter. However, global demand growth is expected to be large enough to sustain production increases in both countries. The domestic market for milk powder is expected to remain small due to competition from other products such as fresh milk.
For more information, visit IBISWorld’s Milk Powder Manufacturing industry in Australia report page.
Businesses in this industry manufacture milk powder, powdered milk-based beverages and baby foods in powder form.
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Products & Markets
Products & Services
Market Share Concentration
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Cost Structure Benchmarks
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