Domestic sales summary

The supermarket channel’s share of Australian drinking milk sales has been relatively steady over the last five years at 53-54%. In late-January 2011 the supermarket channel saw an outbreak of ‘milk price wars’ as one of the major chains reduced its private label milk price to just $1 per litre for both full cream milks and modified milks. This was immediately followed by all major supermarket competitors and led to a shift of sales of around 1.5% market share points from convenience and other outlets to supermarkets.

Supermarket sales volumes grew by 1.3% in 2014/15, with the comparative sales performance between private label milks (+1.6%) and dairy company branded milks (+1.0%) delivering marginal market share growth to private label milks of 0.1% share points to 53.7%. 

The private label brands' share of total supermarket milk volumes has been relatively stable over the last couple of years; and up from around 25% back in 1999/2000. Looking more closely at the fresh white milk segments, where the majority of the pricing activity of the past two and a half years has occurred, private label brands currently account for 64% of fresh white regular full cream milk and 51% of modified fresh white milk sales.

The average price of private label products is significantly less than company branded products, due to a combination of product and pack size mix—with a greater proportion of private label purchases being larger plastic bottles of regular full cream milk.

On the packaging front, plastic bottles account for nearly 80% of all milk sales in supermarkets, with the balance split between gable-top cartons (6%) and UHT cartons (14%).

There have been significant movements within the pack sizes bought by consumers in supermarkets over the last decade. While the 2-litre plastic bottle remains the most popular size, with 47% share, this is down from close to 50% ten years ago. Similarly, the combined share of 1-litre cartons and plastic bottles has slipped from 33% to 16%. The major change has been in the rapid growth of the 3-litre plastic bottle, increasing its share of all supermarket milk sales from 13% when it first appeared in June 1998 to around 31% currently

In 2014/15, the average price of branded milk dipped very slightly from $2.17 to $2.16 per litre, with increases in modified fresh white and flavoured milks offsetting a fall in the average prices of UHT milks. Average private label milk prices have been stable at $1.02 per litre since early 2011.  With little change in either relative shares or average prices, the average supermarket price remained unchanged from the prior year at $1.55 per litre. When combined with the modest volume growth seen during the year, this meant that the retail value of supermarket milk sales increased by 0.9% to more than $2.055 billion.

The introduction of spreadable butters and vegetable oil-based dairy blends, which are easier to spread and lower in saturated fat, has helped to stabilise domestic market sales in the last two decades, after a sustained decline through the 1970s and 1980s.

Nevertheless, Australia’s total retail market for tablespreads has generally contracted over the last decade. Consumer concerns about margarine consumption have meant a continuing decline in share, with dairy spreads taking further retail market share from margarine. This has been a continuing trend over the last decade, as dairyspreads’ share of the category has steadily increased from 30% in 2000/01 to approach 50% in recent years.

It is estimated that around 48% of the domestic sales of Australian dairyspreads were through supermarkets. Supermarket sales volumes increased 5.4% in 2014/15, together with a 3.0% increase in average retail prices during the year, delivered an increase in retail sales value of 8.1% over the previous year to more than $411 million.