Synlait Milk announced last week a new partnership with United States company Munchkin Inc which has plans to launch a new ‘Grass Fed’ branded infant formula.
To fill the orders, dairy farmer suppliers to Synlait will be paid extra if their milk comes from cows exclusively raised outdoors and grazed on pasture, with no feeding of grain or imported feed products.
While grass-fed beef sells for a premium in butcher shops and supermarkets, dairy industry analyst Joanne Bills, a director at consultancy group Fresh Agenda, said pitching milk products as ‘grass-fed’ was a new development for the dairy industry.
«This is really aimed at developing a premium product, some of the retailers in the US think it will sell for about a 10 per cent premium over other products,» Ms Bills said.
She predicted it would be popular with health conscious consumers.
«It is higher in conjugated linoleic acid which does have cancer fighting and heart disease prevention properties, so there is that health pitch as part of the grass-fed movement.»
The move to source milk from grass-fed cows, follows a trial Synlait has undertaken of collecting milk from cows that have been milked in the middle of the night, when melatonin levels are higher, to be used in a milk powder sold as having sleep-inducing benefits.
Night-milking trial for sleep-inducing milk
«Melatonin is associated with improving sleep and again it’s a natural process, or hormone, that’s naturally occurring in milk and higher in milk that’s produced at night, so it will be interesting to see how these products go,» Ms Bills said.
«I think most mothers of toddlers and small babies that don’t sleep would probably welcome any product that they think could help with that issue.»
While Synlait milk is being used in grass-fed infant milk formula sold into the US, the company’s milk powder with higher levels of sleep-inducing melatonin is initially being marketed to consumers in South Korea.
Synlait managing director John Penno said it was part of a strategy to reduce Synlait’s exposure to the Chinese market.
«We are cognisant of ensuring our infant formula business does not become overly reliant on the China market, and so Munchkin, with its focus on the United States market, is a potentially important addition to our growing portfolio of retail-ready infant formula customers,» Dr Penno said.
Analyst Joanne Bills predicted other dairy companies would be watching Synlait’s performance.
«I think other processors will look at what Synlait is doing. They are still quite niche products and slightly out there offerings, but they will certainly be looking at whether these products take-off.»
New Zealand dairy farmer and Synlait supplier Cameron Henderson said there had been interest from farmers in the night milking premium, which was still in a trial phase.
«You have to start somewhere about 9 o’clock at night and then you’ll be milking again about 4 o’clock in the morning, so it can mean a lot of night time hours in the shed.»
Mr Henderson said farmers were factoring premiums into decisions about how they managed their farms.
«Particularly as premiums become quite substantial compared to the milk price, so for example this past season Synlait’s milk price is around the mid $4 mark,» he said.
«So when you are accepting a premium of another $1, or a $1.25 on top of that for night milk, and another 25 cents for grass-fed systems, than that becomes quite a substantial part of your income.
«So particularly for guys looking at setting up new systems, new dairy sheds, or buying a farm, trying to decide on what sort of systems they want to run, then these premiums will start influencing their decisions.»
Source: ABC
