Milk's local brand push

Big Victorian dairy co-operative Murray Goulburn has kicked off its debut in the NSW market this month with a branding drive linking images of its newly-recruited NSW supplier members to the product inside the bottle.

Labels on Devondale's new chilled milk range, now selling for the first time in Coles' supermarkets in NSW and Victoria, will feature up to 200 farmer shareholders and their families.

Devondale has also launched a new television commercial poking fun at off-shore-owned corporate rivals such as Lion, Parmalat and Fonterra, depicting executives in suits haplessly failing to operate a dairy farm.

The advertisement features the tagline, "Some businesses have no business making your milk".

At the same time Lion's long-established Dairy Farmers brand has re-launched itself in Far North Queensland with a provincial Malanda Original Milk label featuring some of its Atherton Tableland producers.

The new label appears on bottles next week, also cheekily cashing in on booming sales of the rising rival A2 milk brand, by advertising that Malanda milk also "contains A2".

The A2 protein, promoted by New Zealand-listed A2 Milk Company as a more appetising milk for consumers (and helping the brand secure eight per cent market share in Australia), is common to milk from many dairy herds, but is not found in all milk.

Dairy Farmers Japanese parent company Lion says its local Malanda brand is recognition of regional differences in its milk market and responds to feedback from North Queensland suppliers and consumers.

"We all want to have a vibrant local dairying industry here for years to come so we're encouraging the local community to get behind Malanda Original Milk," said Lion's dairy and drinks managing director Peter West.

Malanda milk, processed at Malanda, will be in stores from Cape York to Mt Isa in the west, and as far south as Mackay.

The drinks and brewing giant is also assessing the wider milk market to judge how, and if, it may follow up with more regional branding initiatives.

Dairy Farmers retail milk sales strength has taken a caning since Coles cut the price of its own house brand regular milk to $1/litre in January 2011, prompting other retailers to follow its savage discounting lead with their own private labels.

Although Dairy Farmers has previously promoted a few of its farmer suppliers on its bottled milk, the big eastern States processor has also lost many suppliers as a consequence of the milk war - down to more than a third to around 320 in NSW and Queensland.

Lion also lost contracts to supply house brand milk to Coles and Woolworths in the past few years, prompting it to adopt a hard line on farmgate milk payments and crank up milk transport costs for some suppliers, souring relations in many NSW and Queensland dairy districts.

Murray Goulburn (MG), traditionally a cheese, butter and powder producer, launched into the fresh NSW and Victorian milk market with its own brand on July 1.

The range includes two- and three-litre full cream and light bottled milks retailing for $2.99 (two litres) and $3.99 (three litres) each.

The launch co-incided with the start of a 10-year contract to also supply Coles' $1/L house brand milk (previously bottled by Lion).

"As a co-op it made sense to feature our farmers (on the label) so consumers can make a connection with the people who work so hard to make their milk," said MG's communications general manager Lynn Semjaniv.

The farmers represent key dairy supply regions for MG's Devondale brand in both States.

The co-operative now has 163 NSW suppliers, most of whom defected from Lion's supplier the Dairy Farmers Milk Co-operative in the past 18 months.

Dairy Connect NSW executive officer Mike Logan said the big milk companies were trying to break the cheap generic milk mood in the market by encouraging consumer loyalty to support brands which identified "real farmers and real farms" behind their milk products.

Woolworths played the same "providence" card last year launching its premium house brand milk, Farmers' Own, which features NSW Mid North Coast farmer suppliers on the label.

"But I'm a bit surprised more isn't being done to demonstrate how the brands care about the consumer, rather than asking the consumer to care about the farmers," Mr Logan said.

"The A2 milk brand has been the most successful in the business of late and its message only talks about the consumer - it never mentions farmers."

Mr Logan was also unsure how A2 Milk Company would react to Lion's mention of A2 milk on Dairy Farmers packaging.

"It might work, but I find it hard to see the strategy as a positive because Lion's not really adding value to the milk marketplace.

"In fact, they may even be downgrading the whole A2 message."

MURRAY Goulburn's plans to simultaneously start bottling Coles and Devondale milk from new $40 million processing plants in Sydney and Melbourne hasn't gone quite to plan.

The Sydney factory at Erskine Park is now not expected to be operating until the first weeks of August - about a month behind the Laverton site in Melbourne's west.

The Melbourne plant, officially opened by Prime Minister Tony Abbott and Premier Denis Napthine two weeks ago, is currently ramping up to full production capacity, supplying Devondale branded fresh pasteurised milk to the NSW market until the Sydney site is fully commissioned.

The pressure is on Laverton because the plant is also supplying Coles supermarkets in Victoria with Devondale milk and Coles' house brand lines under the new 10-year contract.

A Murray Goulburn spokesman said contingency plans had been implemented to plug the gap in NSW where the company had "some shortfalls in meeting the Coles contracts".

The co-operative has not ellaborated on where it is currently bottling milk for its Coles' contract milk in NSW, although ample alternative capacity exists at both Lion's Penrith plant and Parmalat's Lidcombe site.

The Norco co-operative's Labrador plant in southern Queensland is also bottling Coles' house brand milk under a similar five-year deal with the supermarket chain.

Murray Goulburn's foray into the NSW market has triggered a flood of milk receivals to the co-op after producers switched suppliers to join the farmer co-op - Australia's biggest milk processing business.

About 200 million litres of milk are expected to be received this financial year - roughly 100m litres more than the co-op needs to satisfy its NSW contracts.

Surplus milk will be sold to other processors or trucked south to MG's export dairy product processing plants.