‘Got Milk?’ goes the advertising slogan. Increasingly, investors are responding in the affirmative, as the price of milk edges up.
The situation is one example of pricing power coming into play following the downturn. As competitors thin out, investors are looking for industries where the remaining players can flex their pricing muscles.
One example is the dairy market. Here’s Matterley’s take on it, from the UK fund’s March commentary.
‘It is with a degree of sadness we report that one dairy farm goes out of business every day and this has meant that, as a nation, we are producing less milk today than at any time in the last 40 years. It is our view that ongoing falling supply will bring about improved pricing in the coming years to the incumbent players.’