Non-dairy sales remain relatively small, annual breakfast told

In its annual situation and outlook report, Dairy Australia found while the volume of milks sold in the year to late March had fallen 2.2 per cent, their value had jumped by 10.9pc.

"Inflation is still there, it's still raging on and it's changing the way people spend their money and the way people shop," Dairy Australia analyst Eliza Redfern told the organisation's annual Situation and Outlook breakfast, in Melbourne.

"Affordability is very much the key driver of consumer purchasing behaviour - in the current market it's having a significant effect on sales volumes," she said.

While cheese purchases fell slightly, year-on-year, by 1.8pc to 161 kilotonnes, the take home value rose by $2.7million or 9.1pc.

Dairy spread purchases dipped by 3.9pc, to 59kt, while their value rose 8.8pc and yoghurt sales rose 174kt, or 1.8pc, to a value of $1.277m.

That was up 10.4pc.

The annual situation and outlook report found non-dairy products accounted for less than 10pc in sales of milk, cheese and yoghurt.

Overall, total retail sales in the four key dairy categories amounted to around $8 million.

The report found dairy retail prices had been rising at a faster rate, in comparison to non-dairy, plant-based categories.

"Plant-based beverages, however, fell 4.6pc in volume and 3pc in value," the report said.

"The rapid growth of dairy alternatives, over the last decade, has been undeniable and yet somewhat unsustainable.

"Not only are some households buying non-dairy products less often, but some are removing them from their trolleys altogether.

"Despite all the hype these alternatives get however, their takedown of the overarching dairy categories has been minimal at best, and in today's retail market, undermined by inflation."

READ MORE:

Dairy price 'early days' as the annual merry-go-round of processor offers begins

The report said close to 2pc of Australian households still exclusively buy plant-based beverages, but they were now buying less products.

"Largely led by cost-cutting behaviour, there are now less households buy both dairy and PBB and by association more households exclusively buying dairy milk (58.7pc)," the report found.

"Dairy presents a much more affordable option for consumers."

The report found many plant-based products were struggling to maintain share as shoppers were deterred by their high price points.

READ MORE:

"While dairy sales have also fallen in response to changing shopping behaviour, its relative cost-effectiveness has allowed dairy to better endure in a changing retail environment," the report found.

"Consumers continuing to buy dairy products just as frequently as before emphasises the core positioning of dairy in the retail sector during this time of economic hardship."

But Ms Redfern said the difference was not as stark, in the "yellow spreads" space.

"Margarine has been around for a very long time, in comparison to these other plant-based alternatives, and essentially margarine is marketed as a cheaper alternative to dairy spreads and butter," she said.

Margarine held a larger market share, in comparison to the non-dairy products.

"The non-dairy sector has a larger presence of higher affluence households purchasing those products, in comparison to dairy," she said.

"Because dairy spreads are more expensive, on average, than margarine we do tend to see there are more higher affluence households purchasing them, in comparison to margarine.

"But inflation is impacting everyone, so we are seeing high affluence households are reducing the amount of both dairy, and non-dairy, they are purchasing."

Ms Redfern said those with lower incomes were buying a steady amount of non-dairy, but more dairy products.

"Across all demographics, everyone is looking for more private label products, because it is a surprisingly simple and cost-effective way to reduce costs," she said.

There was a further shift among lower income households to in-home consumption, "they are spending less through takeaway and food service sectors."

"There are more households who are looking for products on promotion," she said

"Essentially, in some ways loyalty has been thrown out the window, whether that's loyalty to retailers or particular brands."