Bega Cheese says prices for dairy commodities have improved but the recovery is still uncertain.
"Commodity prices have improved, albeit on reduced volumes and the sustainability of the recovery is yet to be established," chairman Barry Irvin told the company's annual general meeting.
Bega expects increased price competition and price pressure as a result of lower farmgate milk prices from competing regions such as New Zealand, he said.
While global market volatility affected Bega's business last year, demand for quality, competitive, sustainably produced dairy products is expected to continue to grow.
Chief executive Aidan Coleman said 60 per cent of Bega's output was in consumer or food service pack formats, and it wants this to expand further by 2020.
"At the same time, we will continue to seek ways to better utilise our dairy component streams that do not currently find their way into consumer packaged goods, in order to decrease our exposure to commodity cycles," Mr Coleman said.
Bega is also seeking to develop a new business platform: bionutrients.
This includes products such as infant formula and dietary supplements using milk protein hydrolysates, nutritional proteins, lactoferrin-based ingredients and specialised milk protein extracts.
Mr Coleman said Bega would also invest in new capacity in micronutrient extraction at its Bega facility, utilising the whey stream available there from cheese manufacturing.
Bega shares were steady at $5.05.
Share
