New dairy price war frustrating farmers

Forget cut-price milk, Australia’s big three supermarkets are now in a race to offer the lowest price generic cheese. Here’s the figures.

A new dairy price war has opened up on the 1kg generic cheese front, with one supermarket offering three different in-house brands.

Alongside its controversial NZ-made Hillview Cheese and a Woolworths Essentials line, Woolworths supermarkets now offers a no-name generic cheese brand in black and white packaging.

Selling at $9.30 per kilogram, the new in-house cheese brand unusually has no branding signifier – except to note the cheese type and that the product is made in Australia.

The back of the pack notes the cheese is made by the ‘Big Cheese Company’ with an address the same as Saputo’s Australian headquarters in Melbourne.

However, it’s not the cheapest 1kg block on the market with Aldi’s Westacre Tasty now selling for a rock-bottom $8.99 a kilo.

By comparison, branded 1kg blocks from Cheer at $14.95 a kilo and Bega Tasty at $15.50 a kilo are selling at 66 and 72 per cent higher than the Aldi offering.

Australian Dairy Farmers president Ben Bennett said the latest generic cheese lines were undercutting the profitability of the sector.

“As a rule of thumb, it takes 10 litres of milk to make a 1kg block of cheese,” he said.

“Because it’s selling at less than $10, then that’s dairy produce being sold at below $1 a litre.

“If $1.50-1.55 a litre milk from the supermarkets wasn’t bad enough, now we’ve got cheese selling for less than a dollar a litre.”

Woolworths new generic cheese label.

Last year, Woolworths was criticised by Mr Bennett and other dairy leaders over its line of Hillview cheese using green and gold labelling.

Hillview is still sold by Woolworths at $10.50 a kilogram, with the flood of NZ cheese abating over the past financial year as farmgate prices rise in New Zealand.

“So we’ve got cheese from New Zealand sold with green and gold and Australian cheese sold in black and white – that’s clear as mud to the consumer,” Mr Bennett said.

A Woolworths spokesman said the supermarket was “a proud supporter of the dairy industry as well as providing customers “with access to a range of great value and great quality dairy products.”

“All our fresh milk comes from Australian farmers, and the vast majority of our other dairy products, including cheese, are sourced here too,” the spokesman said.

“Country of origin is clearly labelled on all our dairy products to help customers make informed choices, and ‘Made in Australia’ is very clearly positioned on our white label cheese.”

Westacre tasty cheese one kilo is the cheapest generic block on the market.

The supermarket also defended its continued use of green-and-gold Hillview packaging.

“It’s common for imagery related to green rolling pastures to be used in the marketing of dairy products,” the Woolworths spokesman said.

A Coles spokeswoman said: “Our farmers are not affected by reductions in shelf prices at Coles, as their farmgate prices are locked in through our direct-sourcing model and longer-term contracts.

“These longer term one, two or three-year contracts offer farmers greater income security, enabling them to reinvest in their farms and support long-term sustainability.”

Aldi did not respond to questions from The Weekly Times.