Deregulation of the Australian dairy industry, and ensuing supermarket strategies are transforming the fresh milk supply chains. Factors such as increasing consumer awareness, concerns about food safety and environment, innovation, supply chain integration and rationalisation of supply base are adding momentum to this transformation. Milk processors in response to changing market expectations are getting proactive in their relationship with retailers across all aspects of business, innovating to generate sufficient returns from proprietary brands and strategically orienting themselves to develop a mixed customer portfolio and appropriate management structures to service that portfolio. Milk producers are expanding businesses to achieve production and cost efficiencies and strengthening contractual relationships on input and output side for a greater security.