Australians seduced by posh Lurpak

Scandinavian dairy firm Arla said it had sent extra containers of Lurpak to Australia to meet the jump in demand for the Danish butter brand.

Lurpak's success has come despite it being three times more expensive on average than local butters, indicating Australia may hold significant profit potential for some of Europe's added value dairy products.

Volume sales of Lurpak remain fairly small, only set to rise from 100 tonnes last year to 300 tonnes this year. "Even if these are not huge volumes, they represent a highly profitable business,"​ said Lars Henriksen, regional sales manager for Arla.

Arla has positioned Lurpak as a luxury lifestyle choice in Australia, targetting those with money to burn. The group said it was placing adverts in lifestyle magazines such as Vogue. It has employed similar tactics since launching a marketing campaign for Lurpak in China towards the end of last year.

The moves are one example of how European dairy firms may be able to target added value dairy markets outside of the European Union.

Added value products will be essential in securing the future of Europe's dairy industry, according to the European Commission, which has begun reducing price support on dairy commodities as part of its Common Agricultural Policy reform.

Arla has managed to get Lurpak into two of Australia's biggest food retail chains, Woolworths and Coles, yet the brand's high-end position has also lifted it above the competitive domestic dairy scene.

Australian milk production is forecast to rise nearly four per cent to 10.4bn litres in 2006-07, according to abareecononmics​. It reported in June that many Australian producers were also looking to target added value product sectors, although a significant number of these are likely to be made for export.

The value of Australian dairy exports in 2006-07 is expected to marginally lower than last year's $2.45bn, due to falling commodity prices.