Senior dairy analyst Michael Harvey said the automatic premium international brands had historically received was unlikely to be repeated.
That was pertinent to New Zealand and Australia given the previous alluring premiums, trade pacts and the relatively low capital outlays to build liquid milk processing capacity back here.
While demand from China and Association of Southeast Asian Nations countries was continuing to grow, export margins from Oceania had been squeezed and could potentially tighten further, Harvey said.
Capacity to produce liquid milk export products, either by ultra-high temperature (UHT) treatment for longer shelf life or by air freight for bottled, fresh milks had almost doubled in NZ and Australia.
Oceania processors were also competing against European dairy giants and local Asian brands were providing more competition.
“They have several advantages over importers that they will be looking to leverage, including more extensive product offerings and widespread distribution networks.”
Despite some of these home advantages, longer-term a major hurdle for local brands will still be accessing enough locally produced milk in a cost-effective manner, the report said.
Significant investment in processing capacity would continue to stand NZ exporters in good stead, for companies like Fonterra, Miraka, Goodman Fielder and Westland.
“For dairy exporters this is not just about product and packaging innovation but also category expansion, research and development and behind-the-border support to better cater to changing consumer demands,” Harvey said.
Those willing to build a strong value proposition and promote their point of difference still had plenty of opportunities.
