Australia Drinking Milk Markets

The drinking milk category remains a strategic pillar for the Australian dairy value chain, given that it accounts for 30% of milk utilization and generates more than AUD 4bn in revenue annually. Still, the local drinking milk category has a chequered history amid a constantly changing operating environment. It is also a very mature market with falling domestic consumption, which is offset by growing exports.

As we begin 2023, the market is experiencing a structural increase in consumer prices across the dairy aisle, led by drinking milk in particular. It comes on the back of dairy processors passing through record-high farmgate prices and other downstream supply chain costs to provide more sustainable margins in the value chain. Simultaneously, the dairy supply chain continues to struggle with a declining milk pool, which has yet to show signs of stability. 

On the whole, the drinking milk category has moved from a discount product to a product that drives retail foot traffic, and it is showing improved overall performance. This is important, as it will support the dairy value chain and lead to stable farmgate milk prices over multiple seasons for milk suppliers servicing the drinking milk market. 

Moving forward, the supply chain will increasingly position dairy farm sustainability as a source of competitiveness in the category.