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South-East Asia: A booming market for dairy

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South-East Asia is shaping up as a top market for Australia’s dairy exporters looking to expand and diversify. Austrade senior trade and investment commissioner Paul Sanda looks at the opportunities.

From powdered and fresh milk to yogurt and ready-to-drink beverages, Australian companies like Bulla, Pauls, and Bubs Australia are finding new opportunities that cater to the region’s demand for dairy, which is set to surge over the coming decade.

Rising per-capita incomes, matched with increased consumer preferences for healthier diets and awareness of the benefits of dairy for child development and senior health, are driving increases in consumption that local producers cannot keep up with.

According to Rabobank, the combined markets of Indonesia, Malaysia, Singapore, the Philippines, Thailand, and Vietnam are having one of the largest growths in dairy demand in the world.

By 2030, forecasts indicate the combined annual demand for milk across the six South-East Asian markets will reach close to 19 billion liters (liquid milk equivalent) – up from an estimated 12.9 billion liters in 2020. This rapid growth surpasses that of China, where the annual milk deficit is forecast to reach 15billion liters in 2030 from an estimated 10.2 billion in 2020.

For example, in 2020 Malaysia imported 196,000 tons of milk and cream. Australia is a key dairy exporter thanks to strong bilateral trade relationships. Australian dairy products are considered to be of high quality and sustainable. They attract a 20-25 per cent higher premium than locally produced products.

With a strong reputation for premium products and vibrant trading relations, Australian dairy producers are well positioned to continue to grow and diversify in the region over the next decade.

The Australian Trade and Investment Commission (Austrade) has a network of market experts in Australia and South-East Asia providing advice on export regulations and connecting Australian companies with new opportunities.

Halal certification opens opportunities

With more than 240 million Muslims in South-East Asia, halal certification is an important element for dairy exports to the region. Many South-East Asian markets, including Malaysia and Indonesia, require halal certification on all dairy imports.

Halal certification has implications for the entire supply chain of a consumer product, including dairy items. A certifying body will review the product, premises, and supply chain to check there has been no cross contamination with alcohol or pork products, with all needing to adhere to Islamic practices if the end-product is to be certified as halal.

Halal certification is an investment that can open, help grow and diversify international business opportunities. Not only does it meet import regulations set by governments, it also ensures Australian products are competitive against other producers targeting Muslim markets.

Halal-certified dairy exports are overseen by both Australian government regulators and the halal regulators of the importing country.

In Australia, there are several different halal certification bodies that are recognized with certification authorities in halal markets.

The size and growth of the dairy market across South-East Asia is an opportunity for Australian producers to expand into over the next decade.

Australia’s reputation for premium foods and its strong trading relationships set a solid foundation for companies to build on. Understanding the market, targeting investment, and getting your export plan right is the key to success.

Bulla scoops success

Bulla Dairy Foods was founded 112 years old and is still growing. In 2020/21, it achieved record domestic sales for its chilled and frozen products while exports held steady in a challenging trade environment.

The family-owned business is now embarking on its next stage of growth, looking to triple export revenue to 15 per cent over the next five to seven years.

Bulla first launched in South-East Asia 25 years ago, and with several of its markets having mandatory halal certification, Bulla’s halal export strategy has been central to its growth.

The company now exports halal certified chilled and frozen products, including fresh cream, sour cream, cottage cheese, yogurt, and ice creams.

In 2020/21, Bulla’s sales increased by more than 30 per cent in South-East Asia, with significant growth in Malaysia and Singapore.

By developing a clear distribution strategy for each country, it has been able to boost sales in these key markets.

In Malaysia, where all products are required to be halal certified, Bulla has reported a year-on-year growth of over 50 per cent for the last three years growing sales from $0.5 to $2.5 million.

All of Bulla products are certified by an Australian halal certification body that is accepted in its export markets. When developing new products for these markets, Bulla ensures ingredients meet the standards required to ensure the final product will be halal compliant.

Its quality assurance team also works closely with local halal certifying bodies by providing all the required information. Once the product is certified, the information must be on the production specification documentation, as well as some of the packaging and labels.

Austrade has worked with Bulla to build up its profile in the region and connect with potential customers and sales platforms for continued growth. This involves working with Department of Agriculture, Fisheries and Forestry to advise on any regulations changing and any issues they may face during the export journey.

Earlier in the year, Austrade, in collaboration with a major food retailer Village Grocer, promoted the Australia Fair Campaign featuring famous Australian brands including Bulla as one of them – led to increased awareness and increase in sales during the promotional period.

Bulla plans to continue to drive its growth in Malaysia, through new platforms, and into new regions including East Malaysia and are also exploring other markets, such as Indonesia and Middle East countries.

This article first appeared in the October edition of Food & Drink Business magazine.