Australians are spending more on fancy yoghurt and cheeses but major manufacturers are losing ground to supermarket private label products, a new report on the nation's dairy industry shows.
Protein levels have taken the place of fat content as the latest driver of consumer tastes when it comes to yoghurt, according to the Dairy Australia 2014 Situation and Outlook report.
"New yoghurt product releases in the latest quarter have capitalised on a combination of wider trends including renewed interest in protein (as opposed to fat levels), natural ingredients and indulgence," the report, released on Wednesday, said.
The new products are commanding higher prices too, the report said.
Cheese tastes have divided, with consumers on the one hand buying more premium deli cheeses - up 5.7 per cent for the year compared to just 1.7 per cent growth for standard block products.
But people buying block cheese are buying cheaper, with private label cheese sales growing by 7.5 per cent in the year to October 2013 to now account for 35.9 per cent of the market - taking share away from big-name brands.
Fortunes have started to turn around for Australia's dairy farmers after a tough 2012/13.
Dairy Australia said national milk production for the 2013/14 season is expected to be between 9 billion and 9.2 billion litres - representing a fall of up to two per cent.
However, a recent improvement in farm gate prices caused a slight improvement in December milk production.
Australia's dairy industry attracted global attention in the past year with the takeover battle for Warrnambool Cheese and Butter - won by Canada's Saputo.
Dairy Australia said the extended battle had made many observers "look at Australian dairy in a new light".
Saputo will use Warrnambool to drive into the lucrative Asian market, principally China, where growing demand caused a 30 per cent increase in dairy imports over the first nine months of 2013.