The cheese and whey stream is an essential driver of supply chain returns for the Australian dairy sector. Australia has an accelerating geographic exposure to Asian cheese markets following a period of processing investments in search of higher growth and healthier margins. Cheese import volumes to China and South-East Asia will continue to expand over the medium term (in the next five years), underpinned by strong demand growth in the quick-service restaurant sector and limited local production.
However, Mick Harvey, senior Analyst at Rabobank, says that “While the headroom for growth in Asia is strong, some level of caution is required when assessing the growth potential. A sizeable slice of the demand over the forecast period depends on the expansion and penetration of pizza consumption.” And there have been signals from QSR chains that expansion plans across some economies have failed to meet previous expectations due to macroeconomic headwinds and inflationary pressures (wages and commodities), which have squeezed restaurant margins.