The Great Milk Price War – Where Do You Stand?
I have been watching with interest the great milk price war we have going on at the moment. I’m sure you are all across the story; generic brand milk is being sold below cost at $1.00 a litre.
Aussies love a bargain so at $1.00 a litre we are stampeding the supermarkets, and driving right past the corner shop where we used to get our loaf of bread and milk for the day. Happy days… cheap milk!
If you have been receiving our newsletter for a while you will know my feelings on cheap food. In my mind, it simply does not exist. Somebody always pays, the environment included.
In this instance the small businesses surrounding the industry are getting a touch up; specifically milk vendors, corner stores and smaller independent supermarkets. These smaller retailers are now selling their milk at $1.00 a litre just to match the big boys and have a fighting chance. And as for the milk vendors, well they may as well stay at home as Coles is rumoured to be putting on 240 new vehicles to deliver their cheap milk to cafes, coffee shops and small end user retailers.
Coles is saying that farmers won’t suffer…well I’m not so sure. This low price strategy is not sustainable long term. National Foods is Australia’s major milk supplier and owns the Pura and Dairy Farmers brands which are being savaged by these cheap milk deals. National Foods also bottle much of the generic milk that is at the heart of this issue. If the demand for branded milk continues to fall away because of this yet to be determined ‘predatory pricing’ strategy, it’s very likely that at the next round of price and contract negotiations, wholesale milk prices will fall.
The reason generic milk has always been cheaper than branded milk, even prior to 2011, is that it is a lesser product. Permeate is sold as generic branded milk. In simple terms, Permeate is milk that has been filtered through a very fine sieve to separate the milk-sugar (lactose) and minerals from the milk protein, which gives you the effect of watered down milk (and takes out some of the goodness along the way).
In our business we are fortunate to work alongside friends at the farmers market who sell milk. I’m talking about REAL A2 MILK straight from a small Jersey herd near Tamworth. Milked and bottled on the farm by the farmer, this milk is milk-flavoured milk (you will notice the taste difference versus the supermarket stuff). Unhomogenised, the milk is available at many farmers markets across Sydney. And no, it’s not cheap, but it’s real, it’s untouched, and nobody has burgled it for its goodness. Like all of our products, it is straight from the farmer to you.