Download - Mark Voorbergen presentation
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London 27 June 2011
Mark Voorbergen
Food & Agribusiness Research and AdvisoryRabobank International
Global developments in dairy- Implications for the UK dairy value chain
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Contents
Section 1:
Section 2:
Global dairy market developments
Considerations for the UK dairy chain
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Global demand growth is not driven by the Western world
• World market returns to an annual
growth rate of 2.5%
• Mostly driven by demand growth in
net importing regions
• Growth in the Western world is
mainly about value growth:– Product innovations targeting
health and wellness
– Convenience, snacking
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Supply security has become an issue
• In 2010, China became the nr 1 importer of dairy in the world.
Majority of imports originate from New Zealand. Supply
concentration is a risk
• Large dairy buyers are changing their sourcing strategies (value
chain investments, jv’s with suppliers, less spot market buying)
• Entire value chain is looking for stable long term pricing structures
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Returns on the global market are becoming more appealing
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Traditional price premium for EU and US milk is declining
Global market moves to higher trading range
-0.20
-0.10
0.00
0.10
0.20
0.30
0.40
US
D/
litr
e e
qu
ivale
nt
Premium for US milk over NZ milk
Premium for EU milk over NZ milk
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Market has become very volatile
• International prices pushed back to extreme highs in 2011
• Supply issues created the first spike in 2007/08
• The 2011 price developments are mainly caused by very strong import demand
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Non dairy players creeping in
Christchurch
New Delhi
Mexico
City
New York
Sao PauloSydney
Singapore
Mumbai
Melbourne
Utrecht
Shanghai
Buenos Aires
London
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Non dairy players creeping in
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What’s driving new entrants?
Pull
Push• Health trends/risks of current product portfolios• Rising retail power• Anti-trust limitations
Synergies /
Synchronicity
• Processing, packaging, distribution• Overlap with juices, functional foods• Desire to expand in developing markets
• Dairy growth potential• Nature of growth: health, convenience
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Contents
Section 1:
Section 2:
Global dairy market developments
Considerations for the UK dairy chain
![Page 11: Mark Voorbergen presentation](https://reader036.vdocuments.mx/reader036/viewer/2022070513/588538d11a28ab26518b649f/html5/thumbnails/11.jpg)
• Revenues on the global market are increasingly interesting, but none of the UK processors seems positioned to benefit directly
• Convergence with European/global prices is increasingo Removal of the quota system in 2015 might cause a stronger push of products into the
UK market
o Reduced importance of liquid milk as the primary milk price driver
• Milk prices generally benefit from a milk deficit situation, but in the UK they don’t
• UK dairy sector lacks a dominant multi product multinational co-op that is capable of absorbing the impacts of volatility, or even benefit from it
• UK is seen as an attractive target market for new entrants, for domestic marketreasons as well as for export ambitions
Strategic implications for the UK dairy chain