Norco chairman Greg McNamara feeds calves at his Goolmangar dairy farm.
Norco chairman Greg McNamara feeds calves at his Goolmangar dairy farm.

Norco endures milk price war

LISMORE-based dairy company Norco has withstood the onslaught from the supermarket milk price war that has battered many of its rivals.

Norco chairman Greg McNamara said the company’s market share had only shrunk between a marginal 1.5% and 2% since Coles opened fire on Australia Day, slashing its private-label milk price to $1 a litre.

“What we know to date is regional communities across Australia have been great supporters of the branded product,” he said.

“I think that is driven by the fact that regional communities know their milk is produced locally, they know the people in the factory. Regional communities recognise that the dairy farm and dairy factory is an integral part of their community.”

However city consumers have lapped up the price war with branded sales plummeting as much as 26.2% since it erupted. Of the reduced-fat variety, Coles and Woolworths have increased their combined market share by 64% over the last quarter.

The tactic of price-cutting attracted the ire of dairy farmers and prompted inquiries by the Senate and the Australian Competition and Consumer Commission.

Yet with no end of the war in sight, many milk processors, including Norco, are planning a fightback focusing on the health benefits to differentiate themselves from the generic product.

“We’ve commissioned a report to figure out if there was a market advantage in letting the consumer know it didn’t contain permeate (filtered by-products from cheese production) and that it came from family farms,” Mr McNamara said. He had yet to read the report.

“We have also encouraged Fonterra, which does our marketing, to look at those things and promote them.”

The New Zealand-listed milk company A2 is promoting its product as the “original milk”. According to the Sydney Morning Herald, it is the only processor to increase its sales since the price war began (based on Coles figures).

While the Dieticians Association say there is no solid evidence to show A2 milk is healthier, the company says it is easier to digest than normal milk.

“It is that point of difference which has seen us be unaffected by the price war,” A2’s chief executive Peter Nolan told the paper.

The Italian food group Parmalat also stepped up its health promotion, recruiting Sarah Murdoch to spruik its brand.