By James Penn

Beyond the 6.5 million dairy cattle in New Zealand, sheep and goats are developing their own enthusiastic customer bases, particularly throughout Asia.

A flurry of investment in the sheep milk industry, including significant support from Crown-owned Landcorp, has seen the industry begin to develop a small but strong consumer base to grow from.

This has not only fuelled Landcorp's joint venture partnership with Spring Sheep to develop and market the alternative milk product, but also a number of other investments in the sector.


Back in 2015, Blue River Dairy, one of New Zealand's pioneering sheep milk companies, sold its processing plant and brand to a Chinese company, while another, Maui Milk sold a majority stake to a group of four Chinese investors in early 2016.

The deals have helped open up supply routes into China, where consumer tastes align well with the product.

According to Scottie Chapman, CEO of Spring Sheep Milk Co, there has been "a groundswell of consumer demand for alternative dairy and natural products."

The unique characteristics of sheep milk have formed the basis for valuable niche markets.

Spring Sheep, for example, is specifically targeting Asian mothers of children 1-8 years old.

"Spring Sheep is concentrating on nutritional products for consumers," says Chapman. "We get it right when we work out what sheep milk products can do better than other alternatives."

Chapman points to nutrition, digestibility, and flavour profile as the grounds on which sheep milk can do better for their target market.

Sheep milk has up to twice as much protein and calcium than cow milk and is richer in many vitamins and minerals. The fat globules in sheep milk are also smaller, which makes it more easily digestible.


For Spring Sheep, this has translated into two products currently on the market: probiotic powders and calcium tablets.

Meanwhile, Blue River have a stable of products including milk powder, fresh milk, and a range of cheeses.

The Government's enthusiasm for the industry was reflected in further support for Spring Sheep last year. The Ministry for Primary Industries invested $12.56 million in a Primary Growth Partnership (PGP) programme alongside the company.

According to comments from MPI Director-General Martyn Dunne in a press release at the time, the PGP will invest in "market intelligence to guide a programme of high-value product development and establishing a research farm to increase the genetic merit of the sheep.

"It also includes developing farming and environmental systems, and building the right capability and skills required for successful sheep milk farming in New Zealand."

Meanwhile, the goat milk industry continues to grow within New Zealand, with turnover well over $200 million now.

Like the cattle milk industry under Fonterra, the primary producer and marketer of goat milk is a co-operative, known as DGC (New Zealand Dairy Goat Co-operative).

With annual turnover of $190 million, DGC represents around 85 per cent of the goat milk processed in New Zealand.

Like the sheep milk industry, DGC's core focus in terms of product is nutritional powders for infants and children.

"It's important to state that DGC believes breast milk is the best nutrition source for infants," notes David Hemara, General Manager, Strategy and Commercial at DGC. "As infants transition from breast milk, we believe that goat milk is the best base for making infant formula."

Hemara cites four key differentiators from cow milk: different proteins; easier digestion; faster energy release for infants; and more bioactive components.

"The type of fatty acids in goat milk mean that they can be digested faster, and release energy quicker than other milk," explains Hemara.

These advantages are echoed by others in the industry, such as NIG Nutritionals' General Manager Guy Wills: "While providing all the nutrition of cow's milk, goat milk in addition has a unique fatty acid profile and protein composition that are known to be beneficial for human health and avoid some of the intolerances that some people experience with some other milks."

The goat milk industry appears to be similar, in many respects, to the sheep milk industry - but perhaps boasts a more well-established commercial framework.

"DGC markets and distributes its products in over 20 countries," says Hemara. "But developing this number of markets has taken DGC over 20 years.

"There are opportunities offshore, but international market development is tough, and takes time."

NIGN entered the goat milk industry more recently - in 2015 after just over 30 years of developing other dairy-based health and nutritional products - and the decision has proven a rewarding one.

"The goat milk industry is growing quickly," says Wills.

"In NIG Nutritionals' case our output has doubled in the past year and is set to grow at a faster rate."

Again, the common theme is that the growth is driven by burgeoning demand throughout Asia.

"We are almost totally focused on exports and the majority of that to Asia Pacific markets," says Wills.

The underlying forces?

"A combination of the high interest in health products, consumers becoming more aware of the benefits of special products such as goat milk, and now with the growing middle class having the means and desire to purchase premium products that offer a relevant value proposition," according to Wills.

This growth has put NIGN in a position to make major investments, including a state-of-the-art spray dry plant and upgraded packing plant so far this year.

On the agenda for the remainder of 2017 is the completion of a "super site" that includes a new onsite packing plant, significantly increasing the company's capacity.

"It also ensures a tightly controlled integrated supply chain which will be essential for continuity of business into markets such as mainland China."

Though the sustained growth of alternative milk demand is cause for celebration as New Zealand diversifies its export markets, an industry so dependent on exporting will require careful planning and attention to regulatory climates in its key markets.

"The future for New Zealand exports, particularly to mainland China where regulations are tightening, will be built on integrated supply chains and high levels of traceability and quality control," says Wills.