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Industry

May 20, 2016

Milk Wars

CCI director Sean Edwards speaks for cafes in the midst of milk wars where nothing is what it seems.

Blame game
You can’t blame one party for how things are now, and I can certainly sympathise with both farmers and companies.
I grew up in the Hunter Valley milking a small herd of cows, and have spent the last decade consulting and marketing fresh milk into the café space. The dairy industry now brings in billions of dollars of revenue from cafes, hence any changes in dairy have massive implications across Australia.

Blindness
It is staggering that big dairy companies were blinded to the reality that selling cheap milk to supermarkets was going to end up imploding around all stakeholders. Murray Goulburn and Lion Dairy went head to head for a billion dollar contract for cheap milk into Coles and Woolworths, and Murray Goulburn won. Now those supermarkets sell the cut priced milk in the same rack as their own strong traditional brands, with the discount milk usually about fifty cents cheaper.

Hard times
Many Australian consumers have done it very tough through recent economic instability and have been conditioned to make savings – this means they cut back on cheaper home commodities including milk, meat and bread. We have actually tracked this behavior via our annual Cafe Culture Magazine surveys which show café owners, especially those in shopping centres, are buying supermarket brands over branded and delivered vendor milk.

The stats
Nearly 20% of café owners are buying from retails supermarkets. This obviously is not good for the quality of the coffees they are serving, or for farmers. We have spent years as a consulting business trying to raise the standards of coffee service which has resulted in coffee beverages being served in our cafes with 95% milk ratio.

Deregulation
Deregulation of Australian dairy in 2000 saw small dairy cooperatives sell out to larger multinationals. Farmers took the money at the time, but what they really did was hand over their keys to an unsafe price-regulated future. That is what we are now seeing throughout the country. The future is here.

Where to next?
The foodservice/café market can immediately impact the future of Australian milk prices. Businesses MUST buy branded milk from your vendor – not the retailer who may sell you lower quality milk, just to save a few cents. That cheapness will show in your cup. Remember, 95% of coffee beverages are milk-based.

Make sure you get a good deal and be loyal to your milk delivery vendor who is like you a small business owner who is trying to make a living. These people are the salt of the earth, they fill your fridges, so say ‘hello’ each morning and keep each other up-to-date on the local gossip.
Vendors especially need café owners’ support as they had their business structures pulled apart by the corporates a few years back.

Social media ain’t everything
We have seen the impact of public opinion combining with social media –photographs have been widely shared this week of supermarket shelves empty of branded milk because the customer has taken a stand.

Unfortunately, soon customers will abandon principles for the cheaper milk. Big retailers are aware of this, so it is up to cafes to unite and support branded milk. To the retailers, you know who you are: it’s time to start making long term decisions about the real future and establish business plans for a sustainable future.

 

 





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