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Better buy Bega - or maybe not

I can't quite remember why now, but Bega cheese came up in conversation with David yesterday, so I thought I would do a company investigation/history piece. After all you often find out all sorts of things when you do this.

Because of COVID19 we have not been going to the Queen Vic Market, where we normally buy our classier cheese. Well definitely more expensive cheese anyway. Not that there is anything wrong with many of the cheeses you can buy at the local supermarkets. After all you can get everything from mind-bogglingly expensive imported cheese and artisan crafted cheese to processed cheese slices in a home-brand packet. Mostly though when you are looking at Cheddar, which is mostly what we eat, you are looking at a choice between just a few brands, some of them huge multinational companies. Bega is one of these, and of late we have been buying their Strong and Bitey cheese when it was on special.

You don't get that same feeling of smug superiority buying cheese in a plastic packet, as you when it's cut from a large block of cheese in a market do you? But actually one shouldn't judge the book or, in this case, the cheese, by it's cover really. After all the milk comes from cows which I'm sure are just as lovingly nurtured as those supplying the artisan cheese makers. It's just that the cheese is made in large factories and wrapped in plastic. And some of it is really very nice. And truth be told some of that expensive artisan cheese is also now made in factories and wrapped in plastic. It's all a matter of presentation isn't it?

Besides Bega Cheese began as a farmer's co-operative back in 1899, became a listed company in 2011 and is still almost half owned by those farmers. But it has become one of the larger cheese producers in Australia, having around 16% of the Australian market. Mind you a large proportion of its products are now exported - well until China cuts the dairy industry too. Or have they done that already? Apologies - I'm ashamed to admit that I don't pay a huge amount of attention to those things - or rather I do at the time, but then I forget.

However, these are hard times for the dairy industry and Bega's shares are not doing well. The drought has drastically reduced the amount of milk available which has led the various dairy companies to fight over supply. Dairy farmers have been leaving the industry in droves - well, again, according to one article I read, and yet milk is still being sold at $1.00 a litre by Coles and Aldi which is below production prices. Woolworths has apparently raised their price to $1.10 but the other two are defiantly continuing with $1.00. So really we should be boycotting Coles and Aldi. After all as one article pointed out you can pay $5.00 a litre for a sports drink so why not more for milk?

Jobs are being cut at Bega in its original home because the factory there is being closed and production moved to a more modern plant. Apparently the Bega factory produced processed cheese, and sales of processed cheese slices are declining in favour of natural cheese slices. And about time too say I - but it is interesting that that should be so.

Along the way Bega acquired other cheese businesses - Tatura being the most notable - and in 2017 they acquired the Australian and New Zealand grocery businesses of the international business Mondelez, which included Vegemite. I must admit I thought that Kraft owned Vegemite, but anyway it is now entirely in Australian hands and last summer it was temporarily rebranded as Bartymite in honour of Ash Barty, whom Bega sponsors. Alas I think she did not do that well at the Australian Open this year. I wonder if they will do the same this year - if the Open happens that is.

They don't have a whole lot of other products though - ZoOSh dips (who are they?), Farmer's Table butter - now I do buy that, as they make a cultured French style of butter. Kraft peanut butter was also part of the Mondelez deal which led to a three year court case over packaging. They won - somewhat surprisingly considering this was sort of a David and Goliath deal. The argument was that the deal did not include the packaging, so Kraft could go on packaging peanut butter the same way. But, they lost, and you now cannot get Kraft peanut butter I believe. Well not here anyway.

I think the supply of peanuts is probably down as well because of the drought. I still can't find any raw peanuts in the supermarket.

So there you go. Sort of interesting. No warm, homely story of poor immigrants working hard and building an empire, but nevertheless a story of a group of Australian farmers - the backbone of the country many would say - banding together to improve their product and get a better return. Although at the moment it doesn't seem like it's going their way. So maybe we had 'better buy Bega' just to keep them going. Not their shares though.


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