New Zealand's Dairy Manufacturing Industry Sees Steady Growth Amid Export Demand

The industry's growth has been primarily driven by increased demand from export markets, which has played a crucial role in bolstering revenue despite some volatility in global market prices.

Revenue in the industry is expected to grow at an average annual rate of 3.0% over the five years through 2022-23, reaching an estimated $26.6 billion. This growth trajectory underscores the importance of exports for New Zealand's dairy manufacturers, who rely heavily on international markets to generate revenue. However, this reliance also makes them susceptible to price fluctuations in global markets.

Throughout the five-year period, export prices have generally trended upwards, contributing to the overall revenue growth. However, the industry has not been immune to challenges. The global pandemic, along with associated restrictions and supply chain disruptions, negatively impacted performance at various points, particularly during the three years leading up to 2022-23. Additionally, falling discretionary income is expected to weaken domestic demand for dairy products, posing another challenge for the industry.

Despite these headwinds, the industry is projected to see a revenue increase of 1.8% in 2022-23, driven by rising export demand and favorable pricing conditions. The report emphasizes that the industry primarily focuses on manufacturing a wide range of dairy products, including cheese, yogurt, butter, milk powder, canned cream, and condensed milk, while excluding the production of fresh milk, fresh cream, and ice cream.

New Zealand's dairy manufacturing industry remains a vital part of the country's economy, with its strong export performance helping to offset domestic challenges. As global demand for dairy products continues to rise, New Zealand's manufacturers are well-positioned to capitalize on these opportunities, although they must remain vigilant to the risks posed by market fluctuations and economic uncertainties.