Dairy is deserted by cash-strapped Kiwis
The price of milk has become too rich for many households’ taste with dairy giant Fonterra reporting a ‘‘dramatic’’ fall in sales. The price of a 2-litre bottle of milk has jumped 15c to $4.30 to $4.50 after two price rises in the past five months.
The price hike is the result of strong global dairy commodity prices.
Fonterra Brands managing director Peter McClure, an industry veteran, said it was the highest milk price he could remember and had led to a fall of about 1 per cent in milk sales in the past three months.
This was more significant than it sounded given milk sales had been growing solidly at 2 to 3 per cent for five years, boosted by Kiwis’ love affair with coffee, he said.
Mr McClure had seen shoppers shy away from buying milk during previous price spikes but said sales had recovered quickly in the past. This time the decline is continuing. Mr McClure could not rule out another round of price rises in March after Fonterra directors last month raised their milk payout forecast for the season to farmers from $6.60/kg milksolids to $6.90 on the back of strong international prices.
Sales of 1kg family blocks of cheese had also dropped off after reaching $10 with shoppers reaching for smaller blocks, Mr McClure said.
Butter had soared by more than 50 per cent to around $5 for 500gms but sales volumes were holding steady thanks to the ‘‘incredible impact’’ of householders’ appetite for television cooking and celebrity chef shows, he said.
Supermarket house-branded dairy products are usually slightly cheaper than other Fonterra brands although they are made from the same milk.
Fonterra Brands and Goodman Fielder are the big cheeses of the New Zealand domestic dairy product manufacturing market.
But Goodman Fielder buys its milk from Fonterra, which controls around 89 per cent of the country’s raw milk supply, so is subject to the same price rises as its competitor Fonterra Brands.
DEMAND DROPS: Milk sales have fallen as the price of milk continues to rise.