China is already the largest export market for dairy for both Australia and New Zealand – but the two countries stand a chance to increase their market share over the US if they are quick enough to capture demand from Chinese firms.
“We are receiving feedback from Chinese retail buyers that US products are being replaced on shelves with European and ANZ products,” said Peter Verry, MD of Peloris Global Services, a major fresh food exporter and logistics specialist from the region.
“We have also experienced similar situation with food ingredients. For example, we received an urgent request to source 300+ mtpa parmesan and cheddar cheese for a major product launch scheduled for August this year to replace the existing US sourced products. They’re switching from their US producer and they are actively looking for Australian New Zealand sourcing.”
Peloris has been in business since 2011 and specializes in exporting fresh food – from refrigerated dairy to seafood – from Australian and New Zealand producers into China.
“We are an intermediary, but we’re not a trader,” Verry explained. “We are working with the brand and the product line and we’re working with the customer base. But we provide the producer with complete dashboard of what’s being sold, where it’s being sold, price points, etc.”
“We are also really big on building relationships,” Verry added. “We’ve struggled over the years with the transactional approach of Chinese buyers, but that’s changing. The category buyers in the retail space are becoming more strategic and definitely in the food services with food security, certainty of supply, they have had to be more strategic. COVID was a big wake-up call for them, as well as these tariff issues at the moment.”
The company also improves transparency in terms of how commodities are used over in China, something that doesn’t tend to happen traditionally. “Food producers lose sight of the product once it crosses the border,” Verry explained. “And as a consequence, they’re never quite sure who their end customers are. The traditional Chinese distribution model encourages that. They don’t want to share information about where the product’s going and who’s using it. They’ll just place an order to be delivered next month, say, and then a couple of months later, they might place another order. So there’s a frustration there.
“This is why some of the major retailers now are trying to bypass that model with sales and go directly to the producer.”
Chinese buyers are also increasingly looking to secure stock from non-US destinations in order to avoid potential tariff shocks, we were told. But Australian and New Zealand producers may only have a little while to secure these deals.
“We believe this is a window of opportunity,” Verry said. “I can’t tell you how long that will be. It could be three years, maybe three months, but it’s probably going to be longer.”
But differences in business culture may impact how well ANZ companies take advantage. “China moves very fast – they would bring a new product online really quickly, and as a consequence, they want ingredients and sourcing information really, really quickly,” Verry explained.
“So we’ve been given three weeks to go from scratch to find a supplier and lock in supply for farmers’ and cheddar cheese for the food manufacturing company that we’re talking to. It’s just three weeks – that’s all."
“The problem is that Australian businesses typically move a lot slower than that. They have a lot more red tape and departmental ticks to go through, so I’d say that that’s the biggest challenge for Australian New Zealand producers. They are a lot more methodical, and that’s driven by the domestic market. The domestic market doesn’t really change that much, but the Chinese market changes really, really quickly.
And that’s driven by festivals, too – in China, there are hundreds of festivals that vary across the regions, but each major one is tied with specific foods. “There is a whole range of foods associated with festivals, so they’re constantly evolving and bringing new product line into the shops and then trying to outdo their competitors, which is a challenge for producers in Australia who like certainty.”
Within dairy, the major opportunities are in butter, cheese and cream. In butter, ANZ producers face stiff competition from European and Irish producers, but the shorter supply chain Down Under and more favorable trade relationships gives ANZ companies an edge currently, according to Verry.
“One of the food manufacturers’ pictures that we’re dealing with is the biggest frozen cake producer in China,” the Peloris MD said. “Last year they used 15,000 tonnes of whipping cream. [Recently,] they’ve asked us to source 5,000 tonnes. There’s an example of the opportunity.
“We believe that this is just perfect timing to motivate and galvanize the exporters or food producers of Australia and New Zealand to take advantage of the situation as it’s panned out.”
US president Donald Trump is expected to review Chinese tariffs around August 12, 2025 when a temporary tariff pause is set to end.
But a key legal challenge on the entire US tariff framework is also being heard on July 31, 2025, which can also influence the outcome of future trade restrictions.
This leaves global dairy exporters looking to lock in deals with China just over a month to do so – assuming no changes to US-China tariffs are announced in the meantime.