The agri opportunity
Bulla is an Australian success story - a family owned company with over 100 years of experience which is now competing with multi-national dairy giants on the world stage.
Established in 1910, Bulla Dairy Foods has been run by the same three families for six generations. The company now exports to 20 countries and is one of Australia's largest dairy manufacturers, with about 700 employees and annual sales of over $A500 million.
But like all agricultural groups, Bulla now faces stiff competition from multinational dairy giants such as Unilever, Nestle and Fonterra, well established in emerging markets, including in the Asia-Pacific.
“We need to be smart about our products and our marketing,” CEO Allan Hood told bluenotes. “We can’t compete on the scale of the major players, so we need to add value – something unique for the market we are targeting.”
The signing of ChAFTA has eliminated significant diary tariffs over the last two years, placing Australian dairy companies in a much-stronger position to New Zealand, which has enjoyed a competitive advantage with lower tariffs in China since 2008.
“The progressive elimination of tariffs means we’re able to compete more on pricing with New Zealand and the European Union. The quality, taste and reputation of Australian products is well regarded and continues to drive demand in the market for us.”
Demand in Asia and particularly in China for cheese, yogurt, cream and ice cream has increased in recent years. Middle-class consumers are open to trying more dairy products and exporters have leveraged this trend with added-value products.
Bulla made the most of that trend, but cautions against rushing into the market with an array of new products.
“We’ve had a wide variety of SKUs (stock keeping units) in Asia in the past and it’s been a challenge if there’s a regulation change or a new labelling requirement. We’ve streamlined and simplified that now and we can supply a higher volume with less variation. That seems to be working well for us now and we can differentiate more with the marketing.”
If Australian companies aim to deliver the volume and quality that importers in Asia are demanding, it will support job creation for businesses across the country. Bulla has a dedicated team in Victoria who manages exports to Asia and Allan has seen the value of employing the right staff at Bulla.
“You’ve got to have people on the ground. That’s been a big lesson for us. We’ve brought more of that capability in-house to handle export demand. You can’t just rely on an agent to do it for you in a new market. It shows commitment when you get in there with your own people.”