Australia And New Zealand Cash In On China’s Love For ‘White Gold’

    Food safety scandals and middle-class demand for dairy are making imported milk a booming business in China.
    Imported milk is China's latest middle-class "luxury" item. (Business Insider Australia)
    Jing DailyAuthor
      Published   in Fashion

    Imported milk is China's latest middle-class "luxury" item. (Business Insider Australia)

    While dairy-loving Americans would likely be in an uproar if the price of a liter of ordinary milk went up to $7, Chinese buyers are happily purchasing high-priced milk imported from Australia and New Zealand as demand soars for the imported beverage referred to as “white gold” in China thanks to its luxury status.

    According to a recent Business Insider Australia article, Australian dairy company Norco recently sold 4,000 liters of fresh milk in Shanghai in a 36-hour time period at 45 RMB (US$7.19) for a one-liter bottle. The article states that the sale was part of a marketing push targeting the Chinese market as demand for milk rises:

    Norco chairman Greg McNamara said the response to the fresh milk was “phenomenal” and the Lismore-based farmer co-op is now looking at exporting between 20 and 50 million liters of milk, worth $400 million at the retail level, over the next 12 months.

    McNamara said the co-op hatched a plan two years ago to target the Chinese market, focusing on faster quarantine clearance to make the perishable product viable.

    The successful sale is an example of the high prices middle-class urban Chinese residents are willing to pay for international food brands as food safety scandals dampen Chinese consumers' confidence in domestic companies. A report published in March by consulting firm Data Driven Marketing Asia (DDMA) found that 48 percent of Shanghai residents “actively seek out foreign food brands while shopping.” Meanwhile, 80 percent of high-income Chinese consumers agreed with the statement that “foreign food brands are better” than Chinese ones.

    New Zealand milk producers have also cashed in on Chinese demand in recent years as a result of safety scares over milk powder in Chinese baby formula. Prices of New Zealand milk reached a record high in February and began to fall as China stockpiled milk powder.

    The demand for foreign milk among China’s middle class is expected to keep rising in the long run: Australia plans to export $15 billion worth of milk products to China by 2050. "Our long-term outlook for China is still very positive," Theo Spierings, the chief executive of New Zealand dairy company Fonterra, told The Wall Street Journal in a recent interview.

    Discover more
    Daily BriefAnalysis, news, and insights delivered to your inbox.