Anticipating consumer trends is never an exact science, but national milk processor Lion has certainly nailed at least one - Greek yoghurt.
In the space of a few years Greek yoghurt has become one of several big earners for the milk processor as it ramps up its efforts to promote dairy’s nutritional values and literally freshen up its dairy and juice businesses.
Lion’s Farmers Union Greek is now the top selling name in a market segment which has taken the yoghurt category by storm.
Five years ago Greek yoghurt was little more than a specialty product in Australian supermarket dairy cabinets, representing less than five per cent of the total category.
Today it is at least 30 per cent of the 163,000 tonnes a year total yoghurt market, and still growing.
Lion has almost a third share of that Greek segment.
Sales of the popular Farmers Union brand’s one-kilogram tubs of full fat product are now rising in double digit multiples annually in Australia, and destined for significant gains in Asian markets, too.
Globally the Greek market is tipped to record compound growth of more than 10pc in the next three years.
Under the recent leadership of managing director Peter West, Lion’s dairy and drinks division correctly foresaw rising popularity for the thicker, more acidic cultured product, cranking up production and marketing efforts as consumer habits trended towards more natural, less complicated or sugar-enriched dairy lines.
“The growth in yoghurt in general keeps us very focused on how we can roll out to more markets,” Mr West said.
“We already have a strength in South-East Asia and aggressive growth plans for Asia which will double that business in the next three to four years.”
Lion also makes Dairy Farmers and Yoplait yoghurts exported to Singapore, Malaysia and Thailand where it leads those markets (or has the highest imported product sales) in the cup category.
Mr West has driven a huge shift in Lion’s dairy business since joining the company in early 2014, including overseeing more than $200 million in expansion and efficiency upgrades for many of the company’s 15 dairy and juice plants.
After almost rebuilding its Heritage cheese plant in Burnie, Tasmania in a $150m expansion to create Australia’s largest specialty cheese factory, Lion’s focus has now switched to a $87m upgrade of Dairy Farmers’ Wetherill Park milk site in Sydney.
Dairy Farmers’ Wetherill Park milk site in Sydney.
Later this year the factory will become the eastern Australian supply point for fresh flavoured milks such as Big M, Moove, Oak Classic and Dare.
Flavoured milk sits alongside yoghurt and specialty cheese production as the most lucrative and fast evolving dairy product categories for Lion, which sources milk from 398 farms in all states.
Lion’s Flavoured milk sales are rising almost four per cent annually, helped strongly by Dare’s 600 millilitre coffee and chocolate lines which outsell Coca-Cola in convenience stores.
“South Australia and Western Australia have always been great markets for flavoured milk – the brand popularity of Farmers Union and Masters has always been exceptional – but generally Australians have a much different approach to flavoured milk than you find overseas,” Mr West said.
New processing technology at Wetherill Park will increase the shelf life of 250ml, 500ml and 600ml flavoured milks by 30pc, to 21 days.
The company is also overhauling and streamlining its packaging so fresh milk drinks arrive in shops shelf-ready in cardboard trays rather than traditional milk crates which require extra handling.
In WA a $42m revamp of the company’s Perth milk plant is currently underway with a similar focus on dramatically reducing product handling and improving its chilled flavoured milk output.
“We’re investing heavily in making our manufacturing network a more reliable partner for customers and suppliers and having lower production costs,” Mr West said.
The company’s big dairy division revamp has been partly funded by the 2015 sale of its hard cheese product range including the Coon and Cracker Barrel brands for $137.5m to Warrnambool Cheese and Butter.
That sale also re-defined Lion’s cheese portfolio priorities to focus on premium entertaining and cooking markets.
“The potential for our specialty lines like feta, parmesan, brie, camembert and, blue cheeses, has really been unlocked in the past six months,” Mr West said.
“Last quarter sales were up 7pc – we had a fabulous Christmas.”
The scale of the 110 million-litre capacity Burnie plant has given Lion the ability to keep competitive on price and grow market share, including developing innovative five-product “entertainer” packs to tempt supermarket shoppers to try a selection of cheeses with one purchase – and hopefully broaden their cheese palate and purchasing habits.