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Executive Summary

The RIRDC funded dairy goat productivity project has assisted the Australian industry to significantly expand goat milk production, and has also begun to address seasonality of supply issues and identify lower cost production techniques. The industry in Victoria is now 3 times larger than in 1990 and goat cheese production has increased from less than 5 tonnes per annum to more than 50 tonnes. However the problem of dealing with seasonal surpluses of milk has become significantly greater.

Industry believes that a major constraint to the continued expansion of the industry is identifying new markets for dairy goat products. In particular, markets for products that may be able to overcome the seasonal supply issues.

The Australian domestic market will remain considerably limited in its size and maturity and local manufactured product will also continue to face strong competition from cheaper imports. Although the current level of demand is likely to expand, the Australian dairy goat industry must develop new export markets for its products, to support any domestic expansion.

The purpose of this report is to provide strategic market intelligence on potential new markets for goat milk products in Asia. It is anticipated that this information will assist in expanding the processing of dairy goat milk products, in particular products that may overcome the marketing and production issues associated with seasonal surpluses in milk supply.

Desktop research was completed to collect and analyse data relating to existing market size, import and export levels, analysis of potential markets including import/ export protocols, quotas and tariffs.

This desktop study produced limited information, as import/ export statistics for most dairy goat products are not recorded and/or available.

To gather the above information and to identify potential importers, agents and processors of Australian dairy goat milk products, the services of Austrade and the Department of Natural Resources & Environment were used, to conduct in-market research in five Asian markets.

An industry survey was conducted, in an attempt to quantify the current production and processing capability of the Australian industry. This information is a major determinant of the current ability of the industry to take advantage of potential export opportunities identified in Asia.

Members of the industry peak body, the Australian Goat Milk Association Inc. were consulted throughout the project. An industry meeting was also held, to present preliminary results of the project and to provide an opportunity for further industry input.

The current supply (both in production and processing) capability of the Australian dairy goat industry is a barrier for developing new export markets. The capability of Australia’s goat cheese manufacturing is the only exception, however it is unknown the level to which these processors are ‘export ready’.

Despite the apparent potential export opportunities for longer shelf life dairy goat products, such as UHT or powder, the industry must still overcome the excessive seasonality in supply if it is to successfully develop new markets in Asia. Importers/ buyers seek suppliers who can provide consistent quality and quantity of product that satisfies their needs.

Australia faces considerable competition from countries that have already established a market in Asia for their products. New Zealand has been the most successful supplier of powdered milk, in particular higher valued infant formula. It appears that the united industry approach in this country has enabled the industry to develop consistent supply of a quality product that meets the market’s specifications.

However, it appears that their domestic goat milk production is exceeding the size of New Zealand’s existing export markets.

As expected, Europe and in particular France, maintains the greatest share of the goat cheese markets in Asia. The familiarity of French product to many of the chef’s in Asia presents strong competition for Australian cheese manufacturers. There have also been suggestions that French cheeses have a more favourable smell and milder flavour, which is preferred by most consumers in the market.

Korea currently has no imports of goat milk products, due mainly to the considerable quotas and tariffs (which are expected to change in coming years). Three local companies produce goat milk, in a liquid form and as yoghurt. Goat milk products are sold directly from these companies or in supermarkets and pharmacies in Seoul.

Korean consumers have limited knowledge of the health and nutritional benefits of goat milk. The product is thought to be adversely smelly and strong tasting. Companies currently manufacturing goat milk products are small and do not have the resources to engage in large-scale promotion. Any market entry into Korea would need to include some promotion to consumers of goat milk and its nutritional benefits, possibly in collaboration with existing manufacturers.

Australian goat milk producers could test the Korean market using goat milk powder, as this is not currently available. If this was successful, the product range could be extended. A range of competitively priced goat milk products would be needed to find a successful market in Korea, in order to compete with cow milk products.

It is recommended that Australian companies collaborate with existing goat milk processors by supplying ingredients, or in a common marketing campaign, for mutual benefit. Potential partners in Korea are small-scale processors of goat milk, major dairy manufacturers, and general food manufacturers and trade companies.

Fresh goat milk is currently unavailable in the Japanese market, while goat cheese is largely imported from France (as well as Italy, New Zealand and Switzerland) and sold through specialist cheese stores.

Japanese consumers currently see goat milk as a poor alternative to cow milk with an adversely strong taste and flavour. Consumers prefer cheeses such as feta to be made with cow milk, instead of goat or sheep milk, to suit their milder flavour preference.

Goat milk is likely to be successful as a health or functional milk product in Japan if the health benefits can be adequately proven and communicated to consumers. Goat milk powder would be the best form of packaging for ease of storage, long life and a range of manufacturing applications. Low temperature pasteurisation is necessary to preserve the functional properties of the milk.

Goat cheese is likely to remain a niche product in Japan with a limited, but growing consumer base.

Future sales are likely to be through specialist cheese stores and cheese counters at department stores where consumers are provided with information about cheese use and taste testing.

Goat milk products face the same import restrictions and tariffs as other dairy products entering the Japanese market.

Taiwan is a relatively well established market for goat milk powder, principally aimed at children aged one to seven years. Over A$19 million worth of goat milk products were imported into Taiwan in 1999.

The small amounts of locally produced goat milk are sold mainly as fresh liquid milk. The local goat milk processing industry generally uses imported bulk goat milk powder and repackages it for the domestic market. Most imported bulk powder is from the Netherlands and other parts of Europe, while New Zealand is the dominant supplier of value added canned goat milk powder.

Australian goat milk producers could supply goat milk powder to Taiwan, either as price competitive bulk powder for domestic processors or launch a new brand of Australian canned goat milk powder with nutritional additives targeted at children.

It is important for Australian suppliers to work closely with importers to match the product with consumer preferences, particularly to reduce the strong smell and taste.

Other goat milk products are less established in Taiwan. Goat cheese is currently sold only in small quantities to high-end restaurants and hotels. The local market for goat milk tablets is very competitive and Australian product is unlikely to be successful.

Tariffs exist on the importation of dairy products, including goat milk products. Taiwan currently bans the importation of liquid, UHT and flavoured goat milk, but will most likely move towards a quotatariff system after accession to the World Trade Organisation.

In Singapore, only a small amount of goat milk products are consumed, which is mainly imported goat cheese sold through stores servicing the expatriate community. Singapore has only very limited domestic production of goat milk, however some fresh goat milk is brought in from over the Malaysian border.

The best opportunities in Singapore are for goat cheese and UHT milk, provided it is comparable in price with cow milk. Some supermarkets and importers are willing to test samples of Australian goat milk products to establish if there is demand from consumers. Any goat milk products launched in the Singapore market should be accompanied by a promotional campaign aimed at consumers.

Singaporean importers of goat cheese from Europe have reduced their imports or stopped importing completely due to food scares in Europe. They have also experienced some difficulty in obtaining consistent prices for French product. This could provide a good opportunity for Australian goat cheese producers to establish a market in Singapore.

Demand for goat milk products in Malaysia is expected to remain low as consumers are not aware of the health aspects of the product and are put off by the smell. Any market expansion in Malaysia would need to include promotion to consumers.

The main opportunities are for goat milk powder and tablets, which are both established, to some extent, in the market. Marketing through pharmacies and health food shops is an option, and some supermarkets appear willing to look at quotes from Australian suppliers.

However, like Singapore, expansion of the Malaysian market could be hindered by the inexperience of consumers and distributors with goat milk products. However, there is an opportunity for Australian goat milk products to enter the market, as there are currently only a handful of importers.

Pricing of goat milk products will be a critical factor if the entry strategy is to penetrate the market due to local supply and the range of brands already competing in this segment of the market.

The Australian dairy goat industry faces a number of challenges in setting out to establish new markets in Asia. These include; product pricing, global competition, consistency in supply and up-skilling businesses to become ‘export ready’.

This report highlights considerable opportunities for Australian dairy goat milk products in Asia, however the viability of these opportunities requires further investigation. In-market research and discussions with importers can only provide broad trends and information about the market. The commercial viability of an opportunity is best assessed by negotiations with individual importers, allowing for factors other than just price to be considered.

Asian customers are seeking suppliers of consistent quality product that meet specifications.

Successful development of new markets in Asia will require the Australian dairy goat industry to meet these kinds of needs.

Competition from a number of other countries is very strong in Asian markets, which places constant pressure on prices and supply. It is critical that Australian production and processing operates at worlds best practice, not only to minimise costs of production to remain competitive, but also to enable Australia to maintain its record of safe and clean production systems.

Understanding the constantly changing needs of the market is critical to establishing and maintaining market share. Developing strong relationships with Asian importers/ buyers, particularly by visiting their market, is seen as a critical aspect of doing business in this region.

It is recommended that the Australian industry work together to progress the development of new markets. This should involve maintaining a stronger and more efficient supply chain, establishing industry commitment to a market entry strategy for selected target market(s) and expanding production and processing capability (critical mass).
 

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Last updated: 6 June 2001
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http://www.rirdc.gov.au/reports/EGGS/01-055sum.html