Murray Goulburn chief executive Gary Helou says processors must take the blame; they are guilty of failing to effectively market milk.
He told the Australian Dairy Farmers Conference in Queensland last week that milk is being overtaken by water due to better marketing.
“Just take a look at the level of innovation; water bottles are coming in all shapes, with handles and sprayers.
“What have we done? When did you last see a sexy looking bottle of milk on the supermarket shelf? Let’s not blame Woolworths and Coles. It’s our fault.”
Queensland dairy farmers are blaming the supermarket milk price war for lower farmgate returns. Coles upped the stakes in January 2011 when it cut the price of house-brand milk to $2 for two litres. Woolworths matched the move immediately.
But speaking from Dubai via a video link, Helou told farmers the supermarket giants are important to the dairy industry and it’s wrong to have a go at them. “They are important to us and we must look after them; you can bash me and other processors.”
It’s up to processors to imagine a better product to excite consumers to buy more milk, boosting returns to farmers. Murray Goulburn plans to introduce multipacks of long life milk, similar to slabs of Coke and liquor available at retailers.
According to Helou, Murray Goulburn, as the biggest processor in the country, is taking the lead in lifting the image of milk among consumers. But he warned the industry against focussing only on the domestic market and exporting surplus products.
The days of exporting surplus after meeting the demand from Coles and Woolworths are over, he says. “Today’s consumers in emerging markets don’t want surplus.”
He says Australian dairy processors have been to slow in overseas markets compared to major global players like FrieslandCampina and Arla who have established brands. Both FrieslandCampina and Arla have 20-30 staff working in Dubai, a hub in the growing Middle Eastern market. Murray Goulburn opened its Dubai office last week and has two staff there.
To meet the growing demand from emerging markets in Asia and Middle East, MG also needs to invest in new technology or risk being sidelined by the likes of Fonterra.
MG is spending A$200m to upgrade its manufacturing technology. “If we don’t do this, we might as well give the game away,” says Helou.
