Why are the processors in a frenzy over Warrnambool Cheese and Butter

Well if you look at their website WBC the oldest dairy company in Australia think they have a lot to skite about.

  1. AUSTRALIAN OWNED – Established in 1888, the Warrnambool Cheese & Butter Factory Company Holdings Ltd is the oldest dairy processor in Australia.  We are an Australian owned company listed on the Australian Stock Exchange (ASX) since 2004.

  2. MAJOR REGIONAL EMPLOYER – Warrnambool Cheese & Butter is one of the largest employers in south-west Victoria and supports a wide range of community groups and events.
  3. OUR FARMS – Warrnambool Cheese & Butter receives milk supplied by dairy farmers in south-west and central Victoria and parts of South Australia.

  4. CLEAN, GREEN AND BY THE SEA – Warrnambool Cheese & Butter is located on the Great Ocean Road at Allansford, near Warrnambool, in the heart of the prime dairy country of south-west Victoria.


That’s all nice and fuzzy and whilst they make damn good cheese they are not exactly riding a wave of profitability and experiencing double digit growth as was National Foods and Dairy Farmers Ltd when Kirin aka Lion purchased them in 2007 and 2008



Nicely summed up in the recent Dairy Connect newsletter

With a 2012/13 profit of 7.5M and its current value is in the order of $500 million at the current rate of profitability it will take 66 years to recoup the investment. Obviously the buyers can see something that the current business has not yet turned into profit.

The current owners are a who’s who of dairy. Bega has 17%, Murray Goulburn has 18% and now Lion (Kirin) has nearly 10%. More than 45% of the company is held by its competitors.

The Canadian buyer is Saputo. They have no experience in the Australian market and no existing relationships. 

Bega have made an offer and are structurally capable of having their offer accepted by the shareholders. 

Murray Goulburn have made an offer that is conditional on ACT (Competition Tribunal) approval. This may take some months.

Lion have taken a ‘strategic portion’ of shares and no one really knows their intentions. There is no takeover offer from Kirin. They have stated they want to protect their cheese lines being supplied by WCB. Yet yesterday Lion announced they are still struggling to make money in dairy.

Fonterra have just bought 6% of Bega. They want 10% and are offering $4.95/share.

Parmalat have stuck to the sidelines. Probably wisely. But they must be feeling left out!

Lots of mind boggling strategic stuff happening here and it seems everybody ( if you take out Parmalat) want to play in this sandpit. The end result may just be a stalemate Saputo want a 51% share of WCB and none of the Australian based processors appear to be willing to make that easy for them  

Excitingly if they get smart it could just be dairy farmers who are the big winners here.  

Its time for dairy farmers to decide what type of dairy industry they want in Australia.

Its time they all got together and became strategic like the big players.

Its time they acknowledged that their power lies in their milk supply and leverage it.

Will they grab it with both hands and run with it or will they sit in the stands and watch.

I don’t know about you, for me its a hell of a lot more fun to dance than be a wall flower   


In the words of the late great Lou Reed, I say dairy farmers its time to ‘take a walk on the wild side”

Author: Lynne Strong

I am a 6th generation farmer who loves surrounding myself with optimistic, courageous people who believe in inclusion, diversity and equality and embrace the power of collaboration. I am the founder of Picture You in Agriculture. Our team design and deliver programs that inspire pride in Australian agriculture and support young people to thrive in business and life

3 thoughts on “Why are the processors in a frenzy over Warrnambool Cheese and Butter”

  1. Thankyou for the explanation. I assumed it was a substantial player in the industry but being a grain farmer from SA, I wasn’t quite sure of it’s significance.

  2. As a dairy farmer if I was to go to a bank asking for aloanto purchace a asset that would take 66 years to recoup my investment they would just laugh at ou as they sent you on your way.

  3. “Its time for dairy farmers to decide what type of dairy industry they want in Australia. Its time they all got together and became strategic like the big players.”

    I agree, Lynne. The big news for dairy farmers in all this is that our milk is going to be in demand and that puts us in a position of power. After all, this bidding war isn’t about stainless steel – it’s about competition for milk supply.

    None of the processors, no matter how deep their pockets, the share market, the ACCC or politicians can dictate where we send our milk.

    Will we grab the opportunity with both hands? I hope so and, excitingly, the UDV is hosting a meeting of farmers on Monday 11 November in Warrnambool to discuss exactly how farmers can harness this new influence and shape our futures for the better. What amazing times we live in!

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