After a year marked by food supply disruptions, the hospitality industry is bracing for yet another potential food shortage challenge – butter. As global dairy markets tighten and Australia battles extreme weather, prices are climbing, supply is shrinking and what began as a ripple effect in the dairy sector is fast becoming a supply crisis for venues relying on butter for menu items such as sauces, pastries and more.
Thousands of dairy cows have drowned, farms have flooded, and infrastructure has been wiped out. Simultaneously, prolonged drought conditions in parts of Victoria and South Australia are drying out pastures, forcing farmers to either cut herd sizes or rely on expensive feed and water. The Dairy Australia Situation and Outlook Report warns that “high operating costs will continue to challenge profitability for the 2025/26 season, particularly if extreme weather conditions in many dairy regions do not improve.”
These extreme weather events have severely disrupted milk production, leading to anticipated surges in the prices of butter, milk, and other dairy products across the eastern states especially.
At the same time, Australian butter exports surged by a staggering 243.8% between July-September 2024 compared to the same period the previous year[1], and as global demand continues to rise, more locally produced butter is being diverted to international markets with higher margins, placing an even greater strain on domestic supply. This tug-of-war between local and overseas demand is leaving many Aussie venues short-changed.
Adding further pressure is a noticeable shift in consumer preferences. In March this year, the ABS released findings that dairy blends such as margarine fell by 3.2%, suggesting that Australians are increasingly opting for natural, less-processed products like butter. In response, manufacturers are prioritising retail-sized packs over the larger 5kg–10kg foodservice formats, due to supermarket turnover and margins being higher. This shift is leaving smaller and medium-sized hospitality venues struggling to secure stock and often forced to increase prices or absorb growing ingredient costs.
Recognising that many venues may find it difficult to do this, kitchen management specialists such as My Local Foodie, are stepping in to help. By recommending alternative suppliers and smart butter substitutions, they are supporting venues in maintaining menu quality and profitability. Rather than relying on butter-heavy, labour-intensive in-house preparations of items such as handmade pastries and sauces, they are helping clients connect with trusted suppliers who offer high-quality, pre-made options. These suppliers have the scale to better absorb cost pressures, giving venues a practical way to manage rising input prices without compromising on standards. “In times like these, strengthening local supply chains and powerful menu engineering tools are essential to keeping venues viable,” says Maria Kucherhan, CEO of My Local Foodie. “As we saw during the meat and egg shortages, flexibility and visibility are key. Kitchen management and food costing software, complemented by smarter buying strategies and expert industry support, can give venues the edge they need to operate more efficiently in today’s volatile market. The businesses that adapt quickly, and are using data and supplier networks s
[1] https://cdn-prod.dairyaustralia.com.au/dairynsw/-/media/project/dairy-australia-sites/national-home/resources/industry-reports/dairy-export-reports-briefs/dairy-export-statistics/dairy-export-report-september-2024.pdf
