Forecasts consumers' willingness to pay more for branded milk likely to be short lived.

By Sarina Locke.

Amid the dairy crisis, consumers are continuing to buy branded and more expensive milk.

Social media is full of pictures of empty fridge shelves at supermarkets, with the branded milk in short supply — but the consumer support could be short-lived, according to agribusiness analyst David McKinna.

“There’s always going to be a surge at the start, in the country and in the inner-city,” he said.

Dr McKinna said since the dollar per litre of milk was introduced, specialty brands like A2 milk, and regional labels had sold well to “millennials” in capital cities, who also favoured free-range or organic products.

“But at the end of the day, consumers are battling and if you can save yourself $10 a week by buying [supermarket-label] milk, you will. It’s short-term and fairly marginal,” he said.

“There will be a lot of social media while it’s in the headlines, but I think then it will start to waver.”

With branded milk disappearing off the supermarket shelves, 20,000 Facebook users have shared a post questioning whether supermarkets are “holding back other brands of milk until they sell theirs”.

In another Facebook post, Jo Bennett argued the same.

“At 10am the Coles Birallee Wodonga fridge looked like this.

“Where is the Kiewa milk? There are reports of branded milk not being stocked until the ‘Coles’ milk sells. Well I’m not buying your ‘Coles’ branded products. NONE OF THEM!! And I’m buying my meat, fruit & veg elsewhere. Your customers have had enough of your lack of support to Australian products. You’ve been put on notice Coles. You’ve reduced your cash register operators forcing us to serve ourselves and tried to monopolise the store with your own brand. Well we’ve had enough. Watch us buy our produce elsewhere.”

But Coles Facebook page was defensive.

“Hi Jo, thanks for taking the time to get in touch. It’s not correct that our team are not restocking milk until Coles Brand has sold, our team have actually increased order volumes to try and keep up with the recent increase in demand for brand name milk.
“We can assure you that we’re committed to supporting a vibrant dairy farming sector and we’ll work with our farmers and dairy processors to ensure the long term health of the industry. We’ll share your feedback with our team.”

Supermarkets windfall from private label

Dr McKinna said Coles and Woolworths were guilty for their part in driving down the price of fresh milk, and forcing processors to cut their payments to farmers since 2011.

Coles’ offer to give 20 cents for every litre from a new milk brand, to 2600 Victorian farmers in crisis, through an independent fund, showed Coles was “on the back foot”, Dr McKinna said.

“The $1 a litre milk has had an extraordinary impact on the dairy industry,” he said.

“I calculated it was transferring about $250 million a year from the dairy farmers and processors to consumers and supermarkets.

“It’s had a profound impact and it’s got to the stage where the viability of our food supply has been threatened in some areas.

“It’s not only in our dairy but also fruit and vegetables selling way below the cost of production and it’s simply not sustainable.

“So you can see why people are cynical about the 20 cent per litre rebate [by Coles]. It’s very small, when people are losing hundreds of thousands of dollars per farm.”

With McKinna’s calculation, 80 to 90 per cent of all fresh milk sold in supermarkets is their own private label, and the supermarkets have come to dominate the fresh milk space, selling 60 per cent of all fresh milk sales.

With farmers producing milk at below the cost of production, Dr McKinna said consumers need to be more aware of why they need to pay more for milk.

This post originally appeared on ABC Rural.

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