Domestic sales summary
The supermarket channel’s share of Australian drinking milk sales has continued to trend steadily up over recent years - to 52.5% in 2010/11. 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 $1.00 per litre. This was immediately followed by competitors and has led to further shifting of sales from convenience and other outlets to supermarkets
Supermarket sales volumes grew by 4.6% in 2010/11; with the comparative sales performance between branded (+2.3%) and private label milk (+6.9%) reversing the trends of the previous year.
Private label brands account for over 51% of total supermarket milk volumes, up from around 25% in 1999/00. Their average price is significantly less than company branded products. This lower average price is due to a combination of product and pack size mix – with a greater proportion of private label purchases being bulk regular full cream milk.
On the packaging front, plastic bottles now account for 80% of all milk sales in supermarkets, with the balance split evenly between gable-top cartons and UHT packs.
There have also been significant movements within the pack sizes bought by consumers in supermarkets. While the 2-litre plastic bottle remains the most popular size, with just over 40% share, this is down from close to 50% eight years ago. Similarly, the combined share of 1-litre cartons and plastic bottles has slipped from 33% to 20%. The major change has been in the explosive growth of the 3-litre plastic bottle, increasing its share of all supermarket milk sales from 13% to over 35% since it first appeared in June 1998.
In 2010/11, the average price of branded milk remained steady at $2.11 per litre. When combined with a 9% decrease in the average private label price to $1.11 per litre, delivered a fall in the average supermarket price of 5 cents per litre to $1.60 per litre. This has been due to the impact of price reductions since late January 2011.
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 shrunk 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 decade, as dairyspreads’ share of the category has steadily increased from 30% in 2000/01 to approach 45% by the end of the decade.
It is estimated that around 55% of the domestic sales of Australian dairyspreads are through supermarkets. Supermarket sales volumes contracted slightly in 2010/11, together with an increase of around 4% in average retail prices during the year, delivering an increase in retail sales value of around 3%.