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Sector Trend Analysis – Organic dairy products in New Zealand

August 2019

Executive summary

New Zealand consumers are increasingly looking for organic dairy products that are naturally healthy, have a low environmental footprint and are made with traceable ingredients.

New Zealand is an important global player in the dairy ingredients market and has experienced rapid growth in the packaged/ processed products sectors. The main dairy processors are Fonterra and Open Country Dairy, which have posted strong growth in their production.

The New Zealand dairy industry is one of country's most internationally connected economic sectors. Nearly 90% of its production is exported, and the remaining 10% is sold on the domestic market. Global prices for dairy products have undergone a significant correction in the past few years; the increase in supply, driven by high prices, put downward pressure on prices. However, New Zealand continues to see strong demand for its dairy products, and its production continues to increase, driven by growing demand in China and Southeast Asia.

Because of the growing demand for organic foods in general, prices are high on international markets. Although world milk prices have recently been volatile, prices for organic dairy ingredients in New Zealand have remained stable and relatively high since 2013-2014. Prices for organic milk are high because demand from New Zealand consumers for organic dairy products has been increasing faster than supply.

Major trends in the dairy products market

Health concerns

As part of the trend toward increased health awareness, products with health or functional claims are increasingly popular among elderly consumers and young professionals (34 years and under). Elderly consumers are looking for foods that have functional properties that can target their specific issues (for example, weight management, cholesterol and improving the digestive system). This trend has had a particularly significant impact on processed dairy foods such as yogurt. For example, New Zealand consumers tend to perceive the addition of probiotics as less and less of an "added value to the product" because it is increasingly perceived as a standard. For products to stand out on the shelves, they will have to have multiple claims or benefits to catch the eye of New Zealand consumers.

Collective Great Dairy's Tubb Yoghurt

Among young professionals and millennials, social media continue to promote trendy diets and new "superfoods." There is a strong emerging trend in favour of consuming products claiming to be organic or "environmentally responsible."

For example: Collective Great Dairy's Tubb Yoghurt, a high-fat, unsweetened probiotic yogurt made from whole milk, is described as a smooth and creamy, full-bodied, voluptuous plain probiotic yogurt. This vegetarian product is gluten-free, high in fat and contains no added sugar or undesirable ingredients. It is sold in a 700-g container bearing the Facebook and Instagram logos. The packaging is recyclable (price: NZ$7.80/US$5.25).

The Cheese Barn Organic Ghee

The Cheese Barn Organic Ghee is composed of clarified butter, which is described as a healthy cooking oil. This organic ghee is unhomogenized, certified organic, GMO-free and gluten-free. It is made from natural and healthy ingredients and reflects the manufacturer's respect for the land and the use of sustainable agricultural practices. The product does not contain any artificial additives, chemicals, aerosols, antibiotics, growth hormones or preservatives, and is sold in retail outlets in a 380-millilitre container bearing the BioGro Organic logo (price: NZ$20.95/US$14.22).

Organic milk

In 2016, demand for organic milk by New Zealand consumers exceeded supply. Sales of organic milk increased 30% and accounted for 4% of all white milk sold in stores. Prices subsequently rose sharply, giving new impetus to the market. For the 2016-2017 season, Fonterra paid organic producers $9.20 per kilogram of milk solids, compared to its internal forecast of $6.00 for conventional producers (not counting the co-operative's dividend). The price of organic milk reflects the volatility of the organic products markets in which Fonterra operates. An increasing number of New Zealand dairy producers and dairy farms are taking an interest in organic products.

New Zealand consumers are much more aware today than they were five years ago of the differences between the different types of milk, and industries such as Fonterra (Co-op) are already beginning to adapt and to develop their portfolio of organic products in order to meet a solid and growing demand.

Ingredient traceability

Appleby Farms Bedford Vanilla Bean Ice Cream

New Zealand consumers, particularly young professionals (34 years of age and under), are increasingly concerned about the origin of their processed foods and the processing methods used. A growing number of companies are emphasizing "transparency" marketing to help their products stand out from other products on New Zealand grocery store shelves.

For example, New Zealand ice cream manufacturers are finding new ways to reassure consumers about the safety of ingredients, while consumers are demanding more transparency in the food industry. Appleby Farms Bedford Vanilla Bean Ice Cream is made on a sustainable farm in Nelson, New Zealand. This ice cream is made with A2 protein milk from the farm's own cows and is sold in retail outlets in a 470-millilitre container.

Packaging and added value to existing products

Taupo Pure Premium Skim Milk Powder

A number of existing or discontinued products are being relaunched on the market with packaging that promotes a brand image related to nature and "authenticity." One such example is this powdered milk previously sold in a conventional can/bag, which has now been revitalized with a new type of packaging claiming to be a premium product.

For example: Taupo Pure Premium Skim Milk Powder is now available. The product comes from a local farm, is high in calcium, contains 0.1% fat and is sold in retail outlets in a resealable 1-kilogram package, which makes 10 litres of milk, bearing the AQ Assured mark, a QR code and instructions for use. The manufacturer states that its operations are specially selected to ensure that its product meets the highest standards of food safety programs (price: NZ$16.00/US$10.77)

Source for all the above-mentioned products: Mintel, 2019

Dairy production

New Zealand milk production - '000 kilograms milk solids
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Month 2015 2016 2017 2018
January 208,569 208,036 209,690 194,128
February 165,666 171,624 171,172 165,225
March 165,138 162,357 178,463 174,572
April 138,067 134,607 143,763 148,177
May 80,808 82,798 84,037 88,812
June 13,104 13,013 15,672 17,565
July 19,892 19,923 21,496 22,470
August 116,682 113,130 111,385 116,478
September 209,494 210,113 207,418 219,511
October 263,469 247,431 254,558 271,080
November 248,034 234,770 242,644 248,156
December 232,655 225,501 215,089 228,238
Total 1,861,577 1,823,305 1,855,385 1,894,411

Source: Dairy Companies Association of New Zealand (PDF version)

Note 1: Milk solids is the sum of the total milk protein and fat.

Note 2: This data is for milk solids collected for processing.

Although most of the milk in New Zealand is processed by farmer-owned co-operatives, the industry is becoming increasingly diversified. A growing number of private local and multinational dairy companies are currently operating in New Zealand.

The value of New Zealand dairy products exports has increased on average 8% a year since 1990. The main products exported include concentrated milk and cream (powdered skim and whole milk), butter and dairy products-based spreads, cheese products, infant formula and UHT (ultra-high temperature processing) milk products.

According to the Dairy Companies Association of New Zealand (2018), dairy employment stood at 38,700 jobs in February 2017, 26,500 of which were on farms and 12,200 were in dairy processing.

The strong growth of dairy export prices, driven by robust demand from emerging markets, has improved New Zealand's terms of trade dramatically since the early 2000s.

The new investments in the dairy sector (page 5) are supporting a diversification of products within the industry. Infant formula now accounts for nearly $1 billion in exports, and mozzarella plants are helping the industry benefit from growing demand for dairy products from food service businesses.

The dairy industry is largely made up of small and medium enterprises (SMEs - 20 or fewer employees): 94% of dairy farming employment is in SMEs. In contrast, 79% of dairy processing employment is in firms with 100+ employees.

Summary of New Zealand dairy plant investments, 2013-2018
Company Investment type Location Product group Investment ($M) Date
Fonterra UHT plant Waitoa-Waikato UHT* 120 2013
Fonterra Mozzarella Clandeboye-Canterbury Cheese 240 2016
Fonterra Mozzarella Clandeboye-Canterbury Cheese 72 2013
Fonterra Protein - reverse osmosis Edendale-Otago Milk protein and cream 157 2015
Fonterra Lactoferrin Hautapu-Waikato Milk protein 11 2015
Fonterra Plant upgrade Pahiatua-Manawatu Powdered milk 235 2013
Fonterra New equipment for powdered milk production Lichfield-Waikato Powdered milk 398 2014
Fonterra Reverse osmosis Longburn-Manawatu Powdered milk 14 2014
Fonterra Reverse osmosis Darfield-Canterbury Powdered milk 150 2017
Fonterra Plant upgrade (sliced cheese) Eltham-Taranaki Cheese 32 2014
Fonterra Cream cheese Te Rapa Cheese 32 2017
Fonterra Cream cheese Te Rapa Cheese 20 2017
Open Country Expanded processing capability - milk powder and cheese processing Waikato Powdered milk 100 2017
Oceania Plant upgrade and purchase of equipment Glenavy-Canterbury Mix 400 2018
Oceania Milk powder processing plant Glenavy-Canterbury Powdered milk 236 2014
Synlait Plant upgrade and purchase of equipment Canterbury Mix 300 2015
Westland UHT plant Rolleston-Canterbury UHT* 40 2016
Westland Blending and canning of infant formula Canterbury Infant formula 32 2016
Westland Infant formula Hokitika-West Coast Infant formula 102 2017
Miraka UHT plant Taupo-Waikato UHT* 27 2014
Yashili Infant formula Pokeno,Waikato Infant formula 220 2015
NIG Nutritionals Equipment upgrade Auckland Infant formula 10 2015
Danone New blending and canning line Airport Oaks-Auckland Infant formula 25 2016
Dairy Goat Co-op New equipment for powdered milk production Waikato Infant formula 70 2014
Tatua New equipment for powdered milk production Morrinsville-Waikato Infant formula 65 2014

Source: NZIER, Dairy Companies Association of New Zealand, October 2018 (PDF version)

*UHT: ultra-high-temperature processing

The investment in infant formula plants and canning lines by a number of companies, including Westland, Fonterra, Oceania, Synlait and Yashili, has extended the processing of New Zealand milk from powdered milk to fluid milk and boosted exports of this valued-added product to nearly $1 billion in less than five years.

Companies

Quick overview of New Zealand dairy industry players, 2017

Large primary dairy

Fonterra logo The Fonterra Co-operative Group Limited
Open Country Dairy logoThe Open Country Dairy Ltd
Synlait Milk logo The Synlait Milk Company
Miraka logo The Miraka Ltd
Westland Milk Products logoThe Westland Milk Products Company
TATUA Co-operative Dairy Company logoThe TATUA Co-operative Dairy Company Limited

Secondary dairy

A2 Milk Company logo The A2 Milk Company
Dairyworks logo The Dairyworks Ltd
Goodman Fielder logo The Goodman Fielder Company
Meadowfresh Dairy logo The Meadowfresh Dairy Corp

Medium/small fluid milk companies

Milk New Zealand logo The Milk New Zealand Company
Envictus Dairies logo Envictus Dairies NZ Ltd
Fresha Valley logo The Fresha Valley Company
reen Valley Dairies logoThe Green Valley Dairies

Medium/small secondary dairy

Epicurean Dairy logo The Epicurean Dairy Company Ltd
Blue River Dairy logo The Blue River Dairy Company
Milligans Food Group logoThe Milligans Food Group Ltd
Lewis Road Creamery logoThe Lewis Road Creamery Company
Lion Dairy & Drinks logo The Lion Dairy & Drinks Australia Pty Ltd
Yoplait logo The Yoplait Company
Canary Butter Manufacturing logo The Canary Butter Manufacturing Ltd
WhiteStone Cheese logo The WhiteStone Cheese Company
Waimata Cheese logo The Waimata Cheese Company
Jersey Girls Organic logo The Jersey Girls Organic Company
Dairy Culture logo The Dairy Culture Company
BioFarm logo The BioFarm Company
Barrys Bay logo The Barrys Bay Traditional Cheese Company
Talbot Forest Cheese logoTalbot Forest Cheese, Ltd
Cranky Goat logoThe Cranky Goat Ltd.
KARIKAAS Cheese logo The KARIKAAS Cheese Company
Keytone Dairy logo The Keytone Dairy Company
Ballantyne logo The Ballantyne Company

Processed dairy products companies

Dairy Goat logo The Dairy Goat Co-operative
Oceania Dairy logo The Oceania Dairy, Ltd
Yashili New Zealand Dairy logo Yashili New Zealand Dairy Company, Ltd
Danone Dairy logo Danone Dairy Company

Source: The Investor's Guide to the New Zealand Dairy Industry 2017 (PDF version)

Highlights

Description of the leading dairy companies operating in New Zealand, 2018

Dairy Goat Co-operative logoThe Dairy Goat Co-operative

Dairy Goat Co-operative is an independent co-operative of some 60 dairy goat farmers (as of December 2018). The co-operative was established in 1985 and has been a pioneer and world leader in the development and manufacture of nutritional goat milk-based powders for infants and children. The Dairy Goat Co-operative is located in Hamilton, where its single site includes offices and three manufacturing, dry blending and canning plants.

Danone logoDanone Dairy Company

Danone is a world agri-food leader. The Danone brand portfolio includes both international brands such as Aptamil, Activia, Evian, Volvic and Nutricia, and local brands including the New Zealand brand Karicare. New Zealand is one of the main manufacturing and supply points for Danone Nutricia. Two of the Danone Nutricia production plants are based in New Zealand, and these facilities provide products to Danone Nutricia throughout the Asia-Pacific region. This includes the New Zealand domestic market, where Danone Nutricia is a leader in the category with its Karicare and Aptamil brands.

Fonterra logoThe Fonterra Co-operative Group Limited

Fonterra is a world leader in dairy nutrition and the preferred supplier of dairy ingredients to many large global food companies. It is also a market leader with its own dairy consumer products brands in New Zealand, Australia, Asia, Africa, the Middle East and Latin America. Fonterra is a farmer-owned co-operative and the largest processor of milk in the world. It is one the world's largest investors in dairy research and innovation, and the company produces more than two million tonnes of dairy ingredients, valued-added dairy ingredients, specialized ingredients and consumer products for 140 markets.

Goodman Fielder logoThe Goodman Fielder Company

Goodman Fielder is a leading regional food company. The company owns a host of iconic brands that generations of New Zealanders have grown up with and put in their supermarket carts every week. The range of products offered include milk, cheese, bread, flour, oils, spreads and dressings. Goodman Fielder - Dairy is one of the primary suppliers of dairy products and small goods in New Zealand. Its brands include Meadow Fresh milk, yogurts and cheeses, Puhoi Valley milk and speciality cheeses and Tararua butter and dips.

Miraka logoThe Miraka Ltd

Miraka Limited, a newcomer to the New Zealand dairy processing industry, is backed by a group of Maori trusts and incorporations. These organizations include Wairarapa Moana Incorporation, Tuaropaki Trust, Waipapa 9 Trust, Hauhangaroa Partnership, Tauhara Moana Trust and Huiarau Farms. The company's strategic partners and investors include the Maori Trustee, Te Awahohonu Forest Trust Limited, Vinamilk, a leading milk manufacturer and dairy products enterprise in Vietnam, and Global Dairy Network, which brings experience and knowledge in dairy sales and marketing around the world. As a majority Maori owned and controlled dairy company, Miraka is here for the long term. The owners share a vision of sustainable business practices that will provide long-term returns to current and future generations, from land that will never be sold.

Oceania Dairy logoThe Oceania Dairy, Ltd

Oceania Dairy operates a processing plant in Glenavy, just north of the Waitaki River. The plant is designed for the production of infant formula, a range of milk powders and dehydrated milk fats. At full output, the Glenavy plant has an annual production of 47,000 tonnes of powdered milk and employs more than 110 people. Oceania is a wholly owned subsidiary of the Yili Industrial Group. The production of the Glenavy plant is primarily destined for export to the parent corporation.

Open Country Dairy logoOpen Country Dairy Ltd

Open Country Dairy was established in 2001 as a dairy ingredients manufacturer operating as a private company in New Zealand. The company is supplied by 550 independent milk producers and processes approximately 900 million litres of quality milk per year at its three production sites. The plants are located in Waharoa, Wanganui and Awarua.

Synlait Milk logoThe Synlait Milk Company

Synlait is an innovative dairy processing company based in the heart of Canterbury, New Zealand. It combines expert farming with state-of-the-art processing to produce a range of nutritional milk products that provide genuine benefits for health and well-being. The company produces infant and adult nutritional formulations, functional food ingredients and specialized products that promote a healthy lifestyle. Synlait processes more than 500 million litres of milk a year.

TATUA Co-operative Dairy Company logo The TATUA Co-operative Dairy Company Limited

Tatua is a world leader in specialized dairy ingredients and dairy products. Founded more than 100 years ago, in 1914, Tatua is devoted to building the future of specialized dairies. Its ingredients are used in infant and medical nutrition, sports and lifestyle nutrition, and food and beverage manufacturing worldwide. Its dairy products are sold to food and beverage manufacturers, hotels, restaurants and cafés, bakeries and fast food outlets and in supermarkets. Located in Tatuanui, in the heart of the Waikato region on the North Island, Tatua is owned by 107 shareholder farmers and exports to customers and consumers in more than 60 countries.

SWestland Milk Products logoThe Westland Milk Products Company

Westland Milk Products is a co-operative that was founded more than 75 years ago and is owned by approximately 400 farmers based on the West Coast and in Canterbury. The Hokitika facilities produce a range of infant nutrition products, dairy ingredients and well-known brands such as Westgold™ butter. Westland employs more than 350 people.

Yashili New Zealand Dairy Company logoYashili New Zealand Dairy Company, Ltd.

In December 2015, Yashili New Zealand Dairy opened a state-of-the-art infant formula plant in Pokeno, a half hour by car from downtown Auckland. Yashili New Zealand Dairy is a subsidiary of the Yashili Group, one of the "big three" producers of infant formula destined for the Chinese domestic market. Before construction of the Pokeno plant, Yashili imported New Zealand milk powder into China for more than 10 years. Since August 2010, Yashili has exclusively used New Zealand powdered milk in its infant formula.

Estimated total sales of the New Zealand dairy industry by ownership in 2016

Description of this image follows.
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  • Farmer Co-operative (Co-op): 85%
  • Foreign companies: 8%
  • Private sector: 5%
  • Other: 2%

Wholly owned by foreign interests:

Partially owned by foreign interests:

Farmer Co-operative:

Private sector:

Source: The Investor's Guide to the New Zealand Dairy Industry 2017 (PDF version)

Dairy products market

Historical and forecast data, dairy products market by category - retail sales value in US$ millions and growth during the period (%) - fixed 2018 exchange rates
Category Sub-category 2015 2018 CAGR* (%) 2015-2018 2019 2022 CAGR* (%) 2019-2022
Butter and spreadable fats Butter 56.5 63.1 3.7 65.9 73.0 3.5
Spreadable fats (margarine) 87.6 105.7 6.5 111.8 134.2 6.3
Cheese Natural cheese 278.7 310.4 3.7 323.6 357.7 3.4
Processed cheese 51.4 56.8 3.4 59.1 64.5 3.0
Cream 59.6 65.3 3.1 67.6 72.8 2.5
Milk- and soy-based desserts 29.2 33.3 4.5 34.9 39.3 4.1
Drinkable yogurt 7.9 9.3 6.0 9.8 12.3 7.8
Milk Evaporated/powdered milk 22.6 24.7 3.0 25.4 26.7 1.7
Fermented milk 1.5 1.6 3.2 1.6 2.2 10.9
Flavoured milk 66.1 82.6 7.7 88.5 105.9 6.2
White milk 447.8 483.2 2.6 495.8 516.2 1.4
Soy milk and soy beverages Soy cream 4.7 5.6 6.1 5.9 7.0 5.5
Soy beverages 4.7 5.7 6.4 6.1 7.2 5.9
Liquid soy milk 19.1 20.0 1.5 20.2 20.7 0.7
Yogurt 129.4 144.2 3.7 150.5 166.4 3.4
Artisanal ice cream 39.3 45.5 5.0 47.4 54.5 4.7
Ice cream - individual serving Dairy products-based 129.5 150.1 5.0 156.5 180.9 4.9
Water-based 21.6 24.9 4.9 26.0 29.8 4.7
Take-out ice cream and ice cream in bulk Dairy products-based 199.8 232.3 5.1 242.1 279.5 4.9
Water-based 14.4 16.6 4.7 17.3 19.7 4.5

Source: GlobalData, 2019

*CAGR: compound annual growth rate

Graphic representation of dairy products market by category, retail sales value in $ millions, 2015-2022
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Category 2015 2022
Butter and spreadable fats 207 144
Cheese 422 330
Cream 73 60
Dairy-based and soy-based desserts 39 29
Drinkable yogurt 12 8
Milk 651 538
Dairy-based and soy-based desserts 35 29
Yogurt 166 129
Artisanal ice cream 54 39
Ice cream - individual serving 211 151
Take-out ice cream and ice cream in bulk 299 214

Source: GlobalData, 2019

Organic products

History

The establishment of large-scale organic dairy production has been a relatively late development in the evolution of the New Zealand dairy sector.

In 2002, Fonterra, following the preliminary development work done by its predecessor, the New Zealand Dairy Board, launched its organic dairy production program with the recruitment of farmers on the North Island. In 2009, Fonterra had 127 farmers under contract to supply and process 10 millions kilogram of milk solids per year. However, following a reorganization in 2009, the number of suppliers fell to approximately 53, and production dropped to approximately 6 million kilograms of milk solids.

Estimates vary, but the 2012 New Zealand Organic Market Report listed 99 organic dairy operations; in 2015, another survey of certification bodies identified 73 operators, which suggests a continuing decline in the number of operations.

Relaunch of the organic dairy sector

A growing number of New Zealand dairy producers and farms are increasingly taking an interest in organic products. As mentioned on page 4, the high price of organic products is an incentive and a growing number of operations are expected to shift their production to the organic model in the near future (as of October 2017, source: The Investor's Guide to the New Zealand Dairy Industry, 2017).

For example, organic milk has begun flowing at Open Country Dairy's plant in Awarua, in Southland. The firm says that it took two years to set up a certified organic supply chain with a group of Southland farmers, eight months of dairy plant redevelopment and a sizeable investment (as of December 2018).

The company wants to position itself as a leader in the production of organic powdered milk. There are attractive market opportunities for premium organic powdered milk on Chinese export markets in the aftermath of the 2008 melamine scandal.Footnote 1 More and more Chinese consumers are mistrustful about what is in their food and are turning to certified organic products as a heathier option. These consumers are willing to pay extra for products from markets considered safe, such as New Zealand.

In 2014-2016, Fonterra relaunched production of organic milk on the New Zealand market. The company has ambitions to increase its exports of organic dairy products, including organic powdered dairy products, butter, protein and cheese. For some time now, it has been marketing organic cheeses to mainland China.

Organic products

The supply of organic dairy products in New Zealand is currently less than what the domestic market can absorb. As mentioned above, large-scale organic dairy production has been relatively late compared to the recent increase in demand. Local or artisanal supply or supply from SMEs is increasing significantly in grocery stores and supermarkets, providing high-quality organic dairy products. The level of organic raw milk production is therefore expected to increase in the coming years, and the large processors are also expected to increase their supply of products in New Zealand supermarkets.

In addition, profit margins on certain organic dairy products were higher abroad than on the local market in 2017-2018. Powdered dairy products exported to China and infant formula are excellent examples. Several large producers and processors currently prefer to sell their production on foreign markets rather than on the local market.

Historical and forecast data, certified* organic milk market - retail value sales in US$ millions and growth during the period (%) - fixed 2018 exchange rates
Category Sub-category 2015 2018 CAGR* (%) 2015-2018 2019 2022 CAGR* (%) 2019-2022
Milk Certified organic[1] 28.5 30.8 1.9 31.6 32.9 1.0
Non-organic 509.4 561.3 2.5 579.7 618.1 1.6
Total 537.9 592.1 2.4 611.3 651.0 1.6

Source: GlobalData, 2019

*CAGR: compound annual growth rate

1: includes products that are certified organic by an accredited certification body and registered with national authorities. Excludes producers that claim to be organic on the packaging of their products, but that are not registered with local or regional authorities (which may be the case of many artisanal and/or regional producers).

Market share held by market leaders for certain dairy products in New Zealand, value in US$ millions, 2017
Categories Companies 2017
Butter and spreadable fats Fonterra 61.0
Goodman Fielder 18.7
Lewis Road Creamery 0.6
Other companies 51.0
Private label 25.3
Unilever 1.2
Whitestone Cheese Ltd. 0.6
Total 158.3
Cheese Arla 4.4
Bega Cheese Ltd. 5.4
Bergader Privatkäserei Gmbh 2.1
Dairyworks Limited 7.9
Fonterra 205.3
Goodman Fielder 61.4
Mars, Incorporated 7.5
Mondelez International, Inc. 5.4
Other companies 0.1
Private label 36.4
Tine ITS 2.1
Tuxford & Tebbutt Creamery 2.3
Waimata Cheese Company 4.4
Weight Watchers International, Inc. 1.2
Whitestone Cheese Ltd. 4.1
Total 350.0
Cream Fonterra 13.2
Goodman Fielder 23.7
Other companies 12.0
Private label 8.4
Tatua Cooperative Dairy Company Limited 5.4
Total 62.6
Milk- and soy-based desserts Fonterra 2.0
Goodman Fielder 5.9
Other companies 20.0
Private label 1.3
The Dollop Kitchen 2.3
Total 31.4
Milk Fonterra 180.6
Fresha Valley New Zealand 1.4
Frucor Beverages 3.5
Goodman Fielder 159.1
Lewis Road Creamery 3.2
Nestle ITS 4.6
Other companies 48.6
Private label 165.5
Total 566.5
Soy milk and soy beverages Get Natural 1.1
Other companies 12.0
Private label 9.0
Vitasoy International Holdings 8.1
Total 30.0
Yogurt Biofarm Products Limited 2.5
Epicurean Dairy Co. Limited 3.1
Fonterra 46.2
General Mills, Inc. 2.9
Goodman Fielder 38.0
Hauraki Dairy Limited 1.4
Other companies 39.3
Serra Natural Foods Limited 3.9
Total 137.4
Ice cream - individual serving Bulla Dairy Foods 2.0
Cool West Foods 1.1
Emma Jane 5.6
Fonterra 50.4
Mondelez International, Inc. 2.7
Other companies 33.7
The Ice Bar Co. 4.6
Unilever 64.2
Total 164.3
Take-out ice cream and ice cream in bulk Brent & Tobys 4.4
Deep South Ice Cream Company 1.1
Emerald Foods 15.0
Fonterra 124.0
Kiwi Ice Cream Co. Ltd 7.1
Mondelez International, Inc. 3.9
Much Moore 2.8
Nestle ITS 1.9
Other companies 41.1
Progressive Enterprises 5.0
Rush Munro's 12.3
Unilever 13.3
Wells Enterprises, Inc. 1.7
Total 233.4
Source: GlobalData, 2019

Exports and imports

According to the Dairy Companies Association of New Zealand, the country accounts for approximately 3% of world dairy production (2018), which makes it the world's eighth-largest producer of dairy products. Because of its small population, New Zealand exports 90% or more of its dairy production. The five main markets for New Zealand dairy products during the year ended June 2018 were China, Malaysia, the United States, the United Arab Emirates and Japan.

New Zealand benefits greatly from its proximity to fast-growing Asian markets. In addition, the industry has been able to adapt its various dairy products to the needs of different populations. In 2018, exports of New Zealand dairy products were estimated at approximately CA$13.4 billion.

Star export products

In addition to its basic export products, New Zealand has a wide range of emerging star products and continues to innovate and produce new viable export options. In particular, two dairy products are emerging as "star products" - UHT milk and yogurt.

Exports of UHT milk are increasing with marketing that stresses the product's long shelf life. The growth in exports of New Zealand UHT milk has led to reinvestment in new packaging and innovative new products for products destined for Southeast Asia.

New Zealand exports of yogurts are on the rise, but are currently heavily dependent on a few countries.

Exports of processed foods containing significant dairy ingredients (for example, sports nutrition, infant formula, etc.) are another growth category.

10 main exported New Zealand dairy products - in CA$ millions
Product 2015 2016 2017 2018 CAGR* (%) 2015-2018
Total 11,073.4 10,932.1 13,442.3 13,355.8 6.4
(HS:040221) Milk and cream in solid forms, of a fat content by weight of > 1.5% 4,443.0 4,198.5 5,452.4 5,466.6 7.2
(HS:040510) Butter (excluding dehydrated butter and ghee) 1,133.7 1,225.7 1,740.3 1,853.2 17.8
(HS:040590) Fats and oils derived from milk, and dehydrated butter and ghee 949.4 1,043.4 1,314.8 1,505.9 16.6
(HS:040690) Cheese (excludes fresh cheese, includes whey cheese, curd, processed cheese, blue-veined cheese and other cheese containing veins produced by "Penicillium roqueforti," and grated or powdered cheese) 902.5 909.0 1,009.5 977.5 2.7
(HS:040210) Milk and cream in solid forms, of a fat content by weight of <= 1.5%></= 1.5%> 1,226.6 1,164.7 1,163.5 939.0 −8.5
(HS:040490) Products containing natural milk constituents, whether or not sweetened 583.1 553.2 518.3 472.1 −6.8
(HS:350110) Casein 646.0 489.9 498.8 427.9 −12.8
(HS:040150) Milk and cream of a fat content by weight of > 10% 1.7 1.8 416.1 390.7 507.8
(HS:040610) Fresh cheese "unripened or uncured cheese", including whey cheese, and curd 262.8 316.4 373.8 323.7 7.2
(HS:040620) Grated or powdered cheese, of all kinds 200.4 239.2 252.9 264.1 9.6

Source: Global Trade Tracker, 2019

*CAGR: compound annual growth rate

15 main export markets for New Zealand dairy products - in CA$ millions
Product 2015 2016 2017 2018 CAGR* (%) 2015-2018
Total 11,073.4 10,932.1 13,442.3 13,355.8 6.4
China 2,209.9 2,532.7 3,789.1 3,958.9 21.5
Australia 397.5 477.4 665.2 679.8 19.6
Japan 411.3 382.0 491.0 527.1 8.6
United States 822.1 701.2 600.9 524.4 −13.9
Malaysia 495.4 393.0 566.0 523.5 1.9
Unite Arab Emirates 555.6 381.9 614.9 519.9 −2.2
Philippines 424.6 417.7 489.6 509.3 6.2
Algeria 446.2 628.4 478.1 441.6 −0.4
Indonesia 328.8 366.5 447.3 434.2 9.7
Thailand 343.7 309.6 390.5 394.5 4.7
Saudi Arabia 348.5 337.3 366.8 362.8 1.4
Sri Lanka 191.3 210.6 346.7 358.1 23.2
Taiwan 289.9 253.8 368.2 353.1 6.8
Vietnam 267.9 233.0 351.2 334.6 7.7
Singapore 287.2 227.8 324.2 309.2 2.5

Source: Global Trade Tracker, 2019

*CAGR: compound annual growth rate

Main exporting countries of dairy products to New Zealand - in CA$ millions
Countries 2015 2016 2017 2018 CAGR* (%) 2014-2018
World 343.7 279.2 355.0 382.8 3.7
United States 106.1 87.3 102.6 100.7 −1.7
Australia 81.6 80.5 75.2 74.4 −3.1
Germany 30.6 16.5 51.7 41.2 10.4
France 30.0 26.0 23.1 35.6 5.9
Netherlands 19.3 12.9 28.1 31.3 17.5
Denmark 13.6 18.0 20.8 19.7 13.3
Austria 1.0 0.3 0.3 14.4 141.9
Italy 3.0 4.6 7.2 12.1 59.4
Ireland 4.8 2.5 15.1 11.6 34.2

 Source: Global Trade Tracker, 2019

*CAGR: compound annual growth rate

10 main dairy products imported into New Zealand - in CA$ millions
Product 2015 2016 2017 2018 CAGR* (%) 2015-2018
Total 343.7 279.2 355.0 382.8 3.7
(HS:040410) Whey and modified whey 60.8 36.8 60.2 99.1 13.0
(HS:170211) Lactose in solid form and lactose syrup 87.9 80.1 125.9 92.0 1.2
(HS:040690) Cheese (excludes fresh cheese, includes whey cheese, curd, processed cheese, blue-veined cheese and other cheese containing veins produced by "Penicillium roqueforti," and grated or powdered cheese) 33.4 42.5 53.1 58.5 15.1
(HS:210500) Ice cream and other edible ice, whether or not containing cocoa 19.0 19.7 24.0 36.8 18.0
(HS:040221) Milk and cream in solid forms, of a fat content by weight of > 1.5%, unsweetened 39.6 19.8 12.1 12.2 −25.5
(HS:040210) Milk and cream in solid forms, of a fat content by weight of <= 1.5%> 18.3 8.3 8.4 12.1 −9.9
(HS:040610) Fresh cheese "unripened or uncured cheese", including whey cheese, and curd 7.4 12.7 12.9 11.5 11.5
(HS:040490) Products containing natural milk constituents, whether or not sweetened 25.9 5.1 8.5 10.5 −20.2
(HS:040630) Processed cheese, grated or powdered 4.4 9.6 10.3 10.1 23.3
(HS:040299) Milk and cream, concentrated and sweetened (excluding in solid forms) 11.2 9.8 11.4 10.1 −2.5

Source: Global Trade Tracker, 2019

*CAGR: compound annual growth rate

Health and wellness

Historical and forecast data, dairy products market by product attribute category (health and wellness) - retail sales value in US$ millions and growth during the period (%) - fixed 2018 exchange rates
Category Product attribute 2015 2018 CAGR* (%) 2015-2018 2019 2022 CAGR* (%) 2019-2022
Butter and spreadable fats Low/reduced content of a particular ingredient 38.3 46.0 6.3 48.6 57.9 6.0
Free/does not contain 22.2 25.8 5.2 27.1 31.5 5.1
No claim 83.6 97.0 5.1 102.0 117.8 4.9
Total 144.1 168.8 5.4 177.7 207.3 5.3
Cheese Low/reduced content of a particular ingredient 46.6 51.9 3.6 54.1 59.7 3.3
Naturally healthier 2.1 2.4 3.7 2.5 2.8 3.4
No claim 281.4 313.0 3.6 326.1 359.8 3.3
Total 330.1 367.3 3.6 382.7 422.2 3.3
Cream Low/reduced content of a particular ingredient 23.9 26.2 3.1 27.1 29.2 2.5
No claim 35.7 39.1 3.1 40.5 43.6 2.5
Total 59.6 65.3 3.1 67.6 72.8 2.5
Milk- and soy-based desserts Food intolerance 0.1 0.1 4.4 0.1 0.2 4.1
Free/does not contain 2.1 2.4 4.5 2.5 2.8 4.1
No claim 27.0 30.8 4.5 32.2 36.4 4.1
Total 29.2 33.3 4.5 34.9 39.3 4.1
Milk Food intolerance 15.3 16.5 2.6 16.9 17.6 1.4
Low/reduced content of a particular ingredient 120.5 132.3 3.2 136.4 144.7 2.0
Free/does not contain 142.4 153.7 2.6 157.7 164.3 1.4
Functional or fortified 15.3 16.5 2.6 16.9 17.6 1.4
Naturally healthier 176.0 189.9 2.6 194.8 202.8 1.4
No claim 68.4 83.1 6.7 88.4 103.9 5.5
Total 537.9 592.1 3.2 611.2 651.0 2.1
Yogurt Low/reduced content of a particular ingredient 43.9 48.7 3.5 50.8 56.1 3.4
Free/does not contain 6.2 7.0 3.7 7.3 8.0 3.4
Naturally healthier 1.9 2.1 3.6 2.2 2.4 3.4
No claim 77.4 86.5 3.8 90.3 99.8 3.4
Total 39.3 45.5 5.0 47.4 54.5 4.7
Ice cream - individual serving Food intolerance 1.7 1.9 4.1 2.0 2.2 4.0
Low/reduced content of a particular ingredient 4.5 5.4 6.2 5.7 6.8 5.9
No claim 144.9 167.7 5.0 174.8 201.7 4.9
Total 151.1 175.0 5.0 182.5 210.7 4.9
Take-out ice cream and ice cream in bulk Food intolerance 4.3 4.7 2.9 4.8 5.2 2.5
Low/reduced content of a particular ingredient 18.1 21.3 5.6 22.3 26.1 5.4
Free/does not contain 0.4 0.4 5.6 0.5 0.5 5.3
No claim 191.5 22.4 5.1 231.8 267.3 4.9
Total 214.3 248.9 5.1 259.4 299.2 4.9

Source: GlobalData Intelligence, 2019

*CAGR: compound annual growth rate

Claims

Low/reduced content of a particular ingredient
This category includes products in which one of the ingredients has been actively reduced during the production process, either by replacing it with other products or by modifying the production process (example: low in fat, sugar, cholesterol, etc.).
Naturally healthier
Food products that claim to be all natural. These products are generally perceived as being healthier within a certain category or segment (example: source of vitamins, protein, nutrients, etc.).
Food intolerance
Product specially designed for people sensitive to an ingredient (example: lactose intolerance).
Free/does not contain
Products from which one of the ingredients has been actively removed during the production process or that have been specially produced so as not to contain a specific ingredient (example: dairy-free products).
Functional or fortified
Includes products that claim to be better because of their intrinsic natural characteristics or certain added ingredients (example: protein-enriched, omega-3-enriched, calcium-enriched, etc.).

Dairy-free products

Zenzo's Mango Passion Coconut Yoghurt with Turmeric

A growing number of young New Zealanders are also adopting particular diets and lifestyles, such as the vegetarian diet. New Zealanders are paying increasing attention to labels, ingredients and production methods. Vegetarian and vegan products are growing in popularity, since consumers perceive them as generally healthier options for their diet or for the environment.

Companies are exploring innovative products and launching alternatives on the New Zealand market, such as Zenzo's Mango Passion Coconut Yoghurt with Turmeric. This product is described as a probiotic fermented yogurt with natural ingredients, including real fruit. This vegan product is dairy-free, gluten-free, and contains no GMOs, additives, added starch, added sugar, fillers or preservatives. It is sold in retail outlets in a 330-g container bearing the Living Wage Employer logo. The manufacturer states that it supports Living Wage Aotearoa and that it is committed to providing nourishing foods that are good for the planet.

New product launch analysis

Today's consumers want foods that have a low environmental footprint and are ethically produced. Many young (millennial) New Zealand consumers are keen supporters of stronger environmental standards. Young consumers and young parents are looking for products that are free of additives, antibiotics and pesticides.

New Zealand consumers are looking for convenient products without sacrificing the health aspect or taste. In order to differentiate themselves and reach consumers, companies are expanding their ranges of existing products or creating new packaging adding nature-related images.

Number of dairy products launched in New Zealand by launch type, January 2014 to December 2018
Description of this image follows.
Description of above image
Launch type 2014 2015 2016 2017 2018 Total
New variety/range extension 39 33 35 48 47 202
New product 52 35 35 26 50 198
New packaging 20 16 33 30 17 116
Relaunch 4 6 10 12 12 44
New formulation 1 0 0 1 0 2
Total 116 90 113 117 126 562

Source: Mintel, 2019

Types of dairy products launched in New Zealand by category, between January 2014 and 2018
Type de product New variety/range extension New product New packaging Relaunch New formulation Total
Firm yogurt 45 30 15 3 1 94
Soft and semi-soft cheese 38 16 12 7 0 73
Hard and semi-hard cheese 26 24 11 10 0 71
White milk 6 23 31 9 0 69
Plant-based beverages
(dairy alternatives)
19 18 6 1 0 44
Drinkable yogurt products and other similar products 15 18 8 0 0 41
Plant-based yogurts
(dairy alternatives)
18 18 3 1 0 40
Flavoured milk 10 12 8 0 1 31
Processed cheese 3 16 3 4 0 26
Cream 4 5 8 2 0 19
Total 202 198 116 44 2 562
Source: Mintel, 2019
Top 10 New Zealand companies and parent companies by number of product launches, 2014-2018
Description of this image follows.
Description of above image
Companies 2014 2015 2016 2017 2018 Total
Fonterra 8 24 13 19 12 76
Fonterra Brands 8 24 19 8 12 71
Goodman Fielder 18 6 16 14 6 60
Woolworths 4 1 6 7 18 36
Epicurean Dairy 15 6 7 1 5 34
Hutchinsons 3 2 1 2 12 20
Foodstuffs 1 1 3 14 0 19
Pams Products 0 1 3 14 0 18
Puhoi Valley Cheese 2 5 4 2 5 18
Lewis Road Creamery 2 4 3 2 3 14
Sub-total 61 74 75 83 73 366
Total 116 90 113 117 126 562

Source: Mintel, 2019

New product categories of the top 10 New Zealand companies and parent companies, 2014-2018
Product category Fonterra Brands Goodman Fielder Epicurean Dairy Woolworths Fonterra Pams Products Puhoi Valley Cheese Lewis Road Creamery Whitestone Arla Foods Total
Firm yogurt 15 17 16 0 0 0 5 0 0 0 94
Soft and semi-soft cheese 5 8 0 4 1 0 4 0 6 12 73
Hard and semi-hard cheese 10 10 0 5 2 7 0 0 3 0 71
White milk 25 8 0 9 4 2 3 4 0 0 69
Plant-based beverages 0 0 0 2 0 2 0 0 0 0 44
Drinkable yogurt products and other similar products 8 8 18 0 0 0 0 0 0 0 41
Plant-based yogurts 0 0 0 0 0 0 0 0 0 0 40
Flavoured milk 2 1 0 0 7 0 6 6 0 0 31
Processed cheese 3 0 0 4 1 1 0 0 0 0 26
Cream 1 1 0 2 0 2 0 2 0 0 19
Sub-total 69 53 34 26 15 14 18 12 9 12 508
Total 71 60 34 27 20 18 18 14 12 12 562
Source: Mintel, 2019
Main claims on dairy product packaging in New Zealand, 2014-2018
Description of this image follows.
Description of above image
  • Low-allergen/reduced-allergen (231, 15%)
  • No additives or preservatives (221, 15%)
  • Gluten-free (212, 14%)
  • Environmentallly-friendly packaging (166, 11%)
  • Recyclable packaging (142, 9%)
  • Low-fat/reduced- fat (140, 9%)
  • Vegetarian (126, 8%)
  • Active on social networks (114, 7%)
  • Dairy-free (88, 6%)
  • Probiotic (85, 6%)

Source: Mintel, 2019

*Several products have multiple claims on their packaging.

Examples of organic dairy products

Organic Whole Milk Powder
Source: Mintel 2018
Company Landcorp Farming
Importer Not imported
Brand Pamu
Store type Natural food and health products stores
Store address Central Auckland 1010
Launch date January 2019
Launch type New product
Price in local currency NZ$59.90
Price in US dollars 40.92

product is sold in retail outlets in an 800-gram (g) can containing 32 portions which makes up to 6.4 litres (L) of fluid milk. The package includes preparation instructions, the AsureQuality Limited Certified Organic logo and a QR code.

Cream Top Natural Yoghurt
Source: Mintel 2018
Company Clearwater's Organic Dairy
Importer Clearwater's
Brand Not imported
Store name Huckleberry
Store type Gourmet boutique
Launch date May 2018
Launch type New packaging
Price in local currency NZ$20.75
Price in US dollars 13.75

Clearwater's Cream Top Natural Yoghurt was relaunched with a new design. The product is made from certified organic milk and is presented as all natural and produced from farm-fresh milk. It is recommended with fresh fruits and grains, for home baking or in Mexican or curry dishes, and is sold in retail outlets in a 2-kilogram container bearing the Facebook logo.

Organic Vanilla Probiotic Yoghurt
Source: Mintel 2018
Company Dairy Culture
Importer Not imported
Brand Cyclops
Store name FreshChoice
Store type Supermarket
Launch date May 2017
Launch type New variety/range extension
Price in local currency NZ$2.69
Price in US dollars 1.93

Cyclops Organic Vanilla Probiotic Yoghurt is a true yogurt made exclusively with natural ingredients. It is a source of calcium and protein, and contains no colouring agents or preservatives. This certified organic product is sold in retail outlets in a recyclable 120-g container with a handy spoon and a Facebook link.

Lite Milk
Source: Mintel 2018
Company Fonterra Brands
Brand Anchor A2
Store name New World (Auckland)
Store type Supermarket
Launch date August 2018
Launch type New product
Price in local currency NZ$6.49
Price in US dollars 4.27

Anchor A2 Lite Milk is naturally A1 protein-free, has no additives or added permeate. This fat-reduced milk is sold in retail outlets in a recyclable 2-litre bottle.

Cream Cheese
Source: Mintel 2018
Company Woolworths
Importer Imported product (United States)
Brand Woolworths
Store name Countdown (Christchurch)
Store type Supermarket
Launch date August 2019
Launch type New product
Price in local currency NZ$3.50
Price in US dollars 2.38

Woolworths' Cream Cheese is made with no artificial colours or flavours and is presented as perfect for cooking and baking. This cream cheese is sold in retail outlets in a recyclable 225-g container displaying a Health Star Rating of one star out of five, and includes an easy-to-use measuring guide.

For more information

International Trade Commissioners can provide Canadian industry with on-the-ground expertise regarding market potential, current conditions and local business contacts, and are an excellent point of contact for export advice.

For additional intelligence on this and other markets, the complete library of Global Analysis reports can be found on the International agri-food market intelligence page, arranged by region.

Resources

Sector Trend Analysis – Organic dairy products in New Zealand
Global Analysis Report

Prepared by: François Thériault, Market Analyst

© Her Majesty the Queen in Right of Canada, represented by the Minister of Agriculture and Agri-Food (2019).

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