The Australian dairy industry is flexible during a pandemic | Instant News

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More milk consumption at home has somewhat offset the decline outside the home

Increased consumption of milk at home during the Coronavirus (COVID-19) pandemic has helped the Australian dairy industry offset declines in other market areas.

This shows the flexibility of the industry, according to Tim Hunt, head of RaboResearch Food and Agribusiness for Australia and New Zealand. He recently spoke with Rabobank – dairy analyst Michael Harvey about Australia’s dairy sector across the pandemic.

“Even if the temporary resurgence in liquid milk proves to be occurring only through COVID, it will definitely help the industry get through a difficult period and offset problems in other market categories and perhaps highlight one fundamental strength of dairy products: That it is a multi-category product with multiple channels and the product as well as the country in which it was sold, and its ability to flex in these difficult times has stood up well, “said Hunt.

Harvey said the food service industry was slowly heading for recovery, but milk consumption outside of the home was still falling.

“If we look at consumption outside the home it is problematic, even though consumption inside the house has benefits,” he said. “The consumption channel outside the home is a large part of the dairy drinking market.”

Results from lower milk consumption outside of the home coupled with more consumption at home have leveled off for the industry, but Harvey said the situation could be much worse.

He added that working from home is likely to become more common in the coming years.

“Even though you still have consumers at home who are consuming more of the product, there will be less volume going through that channel,” he said.

With more consumers eating breakfast and preparing coffee at home, as well as cooking more of their own meals, the white dairy sector is experiencing a “revival period,” said Harvey.

Prior to the pandemic, consumption of cereals had declined in developed markets, but consumers had turned to cereal – and milk – as a comfort food during the lockdown.

“The lockdowns we see in response to COVID have been objects blunt enough to hit the market and they have some pretty big distortions in terms of what consumers buy,” Hunt said.

Harvey agrees: “There have been some structural changes in how consumers respond to drinking milk, and they are having an impact.”

They say this shift means dairy brands will need to spend less money on marketing and advertising to achieve the same results, as buyers consume more milk at home by default.

Check out our ongoing coverage of the novel coronavirus pandemic (COVID-19).

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