Synlait Milk lifts payout forecast as global dairy prices rise

“Milk is the drink of the gods,” read a US advertisement featuring the provocative basketball player Dennis Rodman in 1996. “Staying active, eating right, and drinking 3 glasses a day of lowfat or fat free milk helps you look great,” proclaimed superstar footballer David Beckham in a similar ad ten years later.

The adverts, part of the ‘Got Milk?’ campaign that saw famous faces don milk moustaches alongside panegyrics on milk’s health benefits, are typical of industry marketing efforts in the West, where dairy has come to be widely seen as an important part of a nutritious, balanced diet.

In Southeast Asia, where diets have typically not included dairy, drinking milk has taken longer to catch on among the general populace – although not for a lack of effort on the part of dairy companies.

In 1915, the French brand La Petite Fermière ran a quarter-page advert in Luc Tinh Tan Van, a now-defunct Vietnamese newspaper, in which a woman remarked how healthy and plump another woman’s son looked. The mother replied that her son consumed La Petite Fermière condensed milk every day.

“Advertisements also suggested to colonial, Asian audiences that dairy products would help in making consumers – and their countries by extension – stronger, fitter and more ‘modern’,” said Erich deWald, a history lecturer at the University of Suffolk, adding that similar messages continue today. “The general twentieth-century cultural coding of Western things as desirable and modern things meant that everyday consumer commodities such as dairy milk saw a rise in real and symbolic value. Consuming milk could make one better, even whiter.”

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Maurits Klavert, president director of PT Frisian Flag, a dairy company that has been operating in Indonesia since 1922, said his company’s marketing efforts have long centred on health claims. “We have been consistently educating consumers, especially children, about nutrition, the goodness of milk and [the importance of] healthy, active lifestyles. As far as advertising is concerned, we have been consistently building our campaign around the positioning of ‘building stronger families’,” Klavert said.
“We’ve kept a close eye on the global dairy market and the trending increase in dairy prices can’t be ignored,” Chairman Graeme Milne said in a statement.

Tightened global milk supply and ongoing demand for dairy products has led to a 50 percent rebound in prices since July, which is starting to filter through to farmers.

Dairy co-operative Fonterra earlier this month lifted its forecast farmgate milk payout to NZ$6 kgMS.

After rising steadily since 2008 to scale record highs in 2013, global dairy prices fell sharply because of slowing economic growth in New Zealand’s top export market, China, and a global oversupply of milk products.

Milne said Chinese demand was picking up, but it was still unclear whether and for how long that might continue.

“We remain cautious about the medium to long-term outlook and encourage our milk suppliers to take this into account as they make their plans,” Synlait CEO and Managing Director John Penno .

Synlait is based in New Zealand’s south island, supplying to about 200 milk suppliers in the Caterbury region.
Source: Reuters

Link: http://www.reuters.com/article/synlait-milk-outlook-idUSL4N1DU01K

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