WCB (ASX) wcb&#039;s china dairy deal

http://www.standard.net.au/news/local/news/general/wcbs-china-dairy-deal/2311807.aspx

STEVE HYNES
04 Oct, 2011 04:00 AM

WARRNAMBOOL Cheese and Butter (WCB) has started air freighting fresh milk to China in a marketing push that could increase Sungold production by 20 million litres per year.

Milk processed and packaged at the Allansford plant has been flown to China on an occasional basis during recent months and commercial-scale distribution is about to begin with weekly flights that will each carry 100,000 litres, increasing to more frequent flights if there is sufficient demand.

WCB chief executive David Lord said the company had embarked on the venture in response to market intelligence from contacts in China and one of its key distributors, NSW-based Australian Dairy and Food Export Pty Ltd.

“We’ve been working on this exclusively with this distributor and we believe there is a demand for high-quality, fresh milk in China,” he said.

“It’s a case of being opportunistic, seeing what the demand is and seeing if we can make it work.

“The parties we’ve been working with believe there is demand and the logistics allow us to get it there. It remains to be seen how strong the demand is.”

Flights have been leaving from Tullamarine but commercial shipments will fly from Avalon. They go to distribution centres in Shanghai, Guangzhou and Hong Kong.

Mr Lord could not put a value on the shipments for reasons of commercial confidentiality, but he described the sales as “high value”.

“It’s certainly a good thing for our suppliers.”

WCB has been sending small shipments for several months to test the cold storage chain to ensure the milk arrives in top quality condition.

“We also had to make sure all the permits and accreditations were in order,” Mr Lord said.

The first commercial shipments will go to retail markets, but WCB is also exploring sales to non-retail sectors such as the military.

Products being shipped include low-fat and full-fat white milk, as well as some flavoured milks, packaged under Sungold branding with Chinese labelling.

Mr Lord said its exploration of the market indicated a potential market for 15-20 million litres annually — a quantity that would boost Sungold milk production by up to 20 per cent.

Capacity to process the extra milk has been provided by an extension to the Sungold plant, installed this year.

The venture is believed to be the first time an Australian processor has sent fresh milk to China.

“If anyone else has done it, I haven’t heard about it,” Mr Lord said. “It has been quite a complex process getting everything in place.

“We’re seizing what we believe is an opportunity. It is an unusual venture and it is high risk, but we are doing it because we believe there is high-value market that’s ready for our products.”