Dairy processors’ pivoting power

COVID-19 posed a significant threat to the Australian dairy industry. If the industry failed to adopt new safety regimes and different ways of working, valuable export dollars, Australian livelihoods and public health would be at risk.

More than 46,000 Australians work in the dairy industry, with many of those jobs in regional areas. In 2019, the total value of farmgate production was $4.4 billion. Australians consumed 98.6 litres of milk and 13.5 kilograms of cheese per person in the same year.

Perhaps more than any other player in the dairy value chain, dairy processors have had many issues to contend with throughout the pandemic. The Australian Dairy Products Federation (ADPF) is the peak body for Australian dairy processors and we have seen dairy processors faced an uphill battle in recent months.

Processors have been forced to contend with: disruption to supply chains; the closures of usual distribution channels; panic buying; state border restrictions and closures; and being forced to work quickly to ensure COVID-safe operation of manufacturing facilities.

Against all odds, dairy processors have demonstrated impressive resilience and innovation to pivot their operations and business models to keep product on shelves and Australians in jobs.

BROWNES FOODS MILKO 2.0

When panic buying saw fresh milk in short supply in Perth supermarkets, dairy processor Brownes Foods decided to do something about it by launching a modern take on an old-fashioned concept, the milkman.

Its ecommerce platform Milko was up and running in a week, allowing the company to deliver milk directly to homes in Perth. On its first day, more than 160,000 people – roughly 10 per cent of Perth’s population – visited the site.

More than 9000 people have subscribed and over 13,000 deliveries have been made through the online platform.

Brownes expects Milko to be a $1 million retailer by the end of 2020. It was also able to redeploy 45 full-time employees in sales, marketing and product development roles.

CHOC TOPS BRANCH OUT

Prior to the pandemic, Bulla Choc Tops were sold exclusively through cinemas. When restrictions closed theatres, 500,000 Choc Tops were facing landfill. More pressing was the potential job losses at Bulla’s Melbourne manufacturing plant.

Quick thinking on alternative distribution channels resulted in a deal with Coles to sell Choc Tops in supermarkets for the first time. The deal meant $300,000 worth of product had a new sales channel, with 100,000 Choc Tops sold in the first two days.

FAST THINKING FONTERRA

Fonterra is a market leader in cheese and spread categories in Australia, manufacturing and distributing brands including Perfect Italiano, Mainland and Western Star. To put it into perspective, in Australia, one pack of Western Star Butter is sold every second.

When COVID-19 arrived, Fonterra implemented its business continuity plan to ensure supermarket supply.

COVID-safe policies and protocols including enforced social distancing; increased cleaning and sanitisation of work areas; increased availability and use of Personal Protective Equipment (PPE); limiting the number of people on site at factories; and conducting regular temperature checks of all factory employees were deployed.

Fonterra Regional Operations manager Kevin Brown says the company feels “a huge responsibility to keep collecting milk and make sure we keep processing as normal and get those consuming products onto the supermarket shelves”.

The fight against COVID-19 is far from over, but during the last six months, Australian dairy processors have proven they will persevere and adapt.

Originally published in Food and Drink Business Magazine.