Monday, February 21, 2011

Frozen Milk: New Kiwi Treat

Last week, NZ dairy monster Fonterra trumpeted a freeze on wholesale domestic milk prices for the rest of 2011. Such nice guys!
CEO Andrew Ferrier said they'd already absorbed $10 million of increased costs over recent months and any further increases this year would also be absorbed. Isn't that good of 'em? (Since 2007, Fonterra has recorded 13% compound annual profit growth. And in 2009-2010, it delivered revenue of $16.7 BILLION, up 4% on the previous year - so taking $10mill on the chin is just petty cash!) "World dairy prices have gone up more than 26%...we've only passed on an average increase of 1.4%. While these prices are good for food exports and the economy, NZers are feeling this in their shopping trolley. We recognise milk is an important part of the diet and we want to ensure that future generations grow up enjoying it every day." Awwwwwwww, they have our best interests at heart. Truly. "It would be great to see retailers getting in behind this commitment for the benefit of NZ consumers."
Oh, the fridge light goes on...it's not Fonterra's fault milk is so pricy: it's the ratbag retailers'! Thanks for the clarification, Mr.Ferrier.
That's a nice bit of "spin"...yet the price freeze was announced the - very - same - day that Agriculture Minister David Carter demanded a special report (and for Fonterra to revisit its sums) after public anger at the fast-rising price of milk and other dairy products. Coincidence...? Ahhh...nuuuuhh!
Cash cow?
Peter McClure, managing director of Fonterra's NZ operations said it could be a "prudent" time for it to start market research on the rising price and consumer resistance, after a "dramatic" fall in sales in the past three months. No shit, Sherlock! You need research to tell you why consumers are pissed off? Well, here's my two minutes' worth:
Woolworths own-brand standard milk 2L = $4.15!
Meadow Fresh calcium-added trim milk 2L = $4.75!!
Meadow Fresh Lite homogenised milk 2L = $4.79!!!
Anchor calcium-added milk 2L = $5.09!!!!
Happy with those prices? Really?
They should take a leaf out of the Oz supermarkets' battlebook: across the Tasman, milk is ammo in a price-slashing war, with own-brand milk plummeting in price - while sales have rocketed 15-20%!
Hmmm, can't for the life of me figure out why though.
I'll ponder it more while I suck on my frozen milkblock...
PS: 31 March 2011 - Investigation underway into milk price gouging claims...
PS: 16 June 2011 - NZ pays $195m too much each year for milk!!!

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