Cash cows

By Michelle Knott

- Last updated on GMT

Related tags Dairy Dairy products Dairy crest Milk

Cash cows
Cow shuffling may never make it as an Olympic sport, but dozens of British dairy farmers have taken it up recently on behalf of Robert Wiseman Dairies. They've spent months testing their animals and rejigging multiple herds in order to form an elite squad of cows that produce only A2 milk. Never heard of it? According to Wiseman it's already the fastest growing grocery product in Australia and it will be hitting British shelves this summer.

Most milk sold in the UK naturally contains two varieties of the protein beta-casein: A1 and A2. But A1 has been implicated in the sort of self-diagnosed intolerance to dairy that afflicts up to one in five western consumers. This is distinct from the medically diagnosed lactose intolerance that affects just five per cent of the population.

Wiseman hopes that ditching A1 beta-casein could enable millions of people who avoid dairy to enjoy milk again. The firm is initially targeting liquid milk, but other A2 dairy products could follow.

"A2 milk is fresh milk with nothing added or taken out," ​says Graeme Jack, communications director. "If you take the average Holstein or Friesian herd, 30% will be producing A2. We're testing herds cow by cow. Some of the farmers we're working with have multiple herds so they can mix them up to produce an A2 herd."

Wiseman is working with New Zealand specialist A2 Corporation (A2C) to carry out the testing, which uses a hair from the tail or a clip from the ear of each animal. "A2C brings the patents and intellectual property, including the testing kit,"​ says Jack. "It also has the knowledge in branding and marketing from Australia, where A2 milk is the fastest growing dairy product and the fastest growing grocery product."

The farm gate price for A2 milk will be higher than mixed milk to cover the upfront costs of testing and the ongoing breeding programme. Maintaining segregation through the supply chain will also cost more, with separate tankers and storage facilities, but Jack is confident that the market will bear the extra cost: "The Australian example shows that customers are fiercely loyal because, in many cases, A2 milk completely relieves their digestive problems."

Wiseman's potential game-changer fits neatly into the health megatrend, which is driving virtually all food sectors. Dairy in general could be a big winner here with its strong 'natural' credentials, especially with the advent of lower-fat variants.

"Dairy products are inherently natural, so we've been through a time of consumers thinking dairy is unhealthy because of the fat and they're now prepared to trade that off because dairy is natural," ​says Wayne Morley, head of food innovation at Leatherhead Food Research.

"Milk is the original 'superfood' and consumers understand and trust the natural benefits of dairy products such as calcium and protein," ​says a Dairy Crest spokesman. "44% of shoppers now buy low-fat options and a third of shoppers claim they will be buying more products lower in saturated fat over the next 12 months."

This has been boosting the performance of Dairy Crest's lighter brands. For instance, Country Life Spreadable Lighter (butter) and Cathedral City Lighter (cheese) each account for 12% of their respective parent brand's sales, while Clover Lighter (spread) has reached 16%.

"As well as investing in creating lighter variants of our core brands we have also reformulated Utterly Butterly twice to reduce its level of saturated fat, created Davidstow Lighter cheddar and, in partnership with WeightWatchers, we created a low-fat double cream, a low-fat crème fraiche and a low-fat custard,"​ says the spokesman. "Together, our lighter food brands and one per cent milk have saved a total of 8,500t of saturated fat from consumers' diets."

Dairy also scores health points with probiotics, and consumers already understand the association between dairy products and gut health, which should help overcome obstacles presented by health and nutrition claims legislation, which threaten to stifle development. "Danone Activia is a great example,"​ says Matt Incles, market intelligence manager at Leatherhead. "The messaging is more subtle than it has been: an arrow pointing downwards or a picture of a woman with her hands on her tummy. Their marketing is really very clever."

Sustainability is another megatrend that's having a big influence in dairy. For instance, Arla Foods' planned £150M facility near Aylesbury is expected to be the UK's first zero-carbon dairy. In addition, Arla is involved in a promising research initiative that could transform the way farmers and dairy companies treat their liquid waste.

Arla's microbial fuel cell

Arla, Lindhurst Engineering and the University of Nottingham are developing a microbial fuel cell (MFC) to convert farm effluent and dairy by-products into electricity and bio-gas.

The one cubic metre capacity pilot plant unveiled last spring not only converts farm slurry and dairy waste into electricity, it also produces hydrogen gas, which creates further renewable energy. A production-scale cell should be able to supply a farm with all its energy if fed with slurry from 200 cows, or provide 10% of a large dairy's annual energy requirement if fed by-products from a large dairy processing site.

"MFCs are not a new idea, but the issue has always been that they rely on anodes and cathodes made of very expensive materials such as rare earth elements. We need cheap, replicable technology to take the idea into the commercial field and that's the challenge we set ourselves,"​ says Arla's sustainability manager Richard Laxton. "We're developing a piece of kit that's modular and relatively cheap."

The partners, which now include anaerobic digestion firm Clearfleau, Arla and Lindhurst, have secured Knowledge Transfer Partnership funding to continue the research at Nottingham and hope to refine the demonstration technology into a commercial proposition over the next 18 months. Commercial MFC is expected to operate successfully at a smaller scale than conventional anaerobic digestors, as well as being able to use a single waste stream, rather than demanding mixed waste. This should enable individual dairies to deploy it cost-effectively.

"The resulting waste water isn't potable, but the organic substrate is broken down into hydrogen, carbon dioxide and a bit of methane. As it digests the waste it produces a scum that can be dried and safely used as fertiliser. This has also got potential beyond the dairy industry, which is really exciting,"​ says Laxton. "It could be used in other sectors, as well as water treatment."

Of course, sustainability is not just about mega-dairies and groundbreaking research. More modest initiatives are underway. Packaging is a key target area, with Wiseman unveiling a more recyclable milk bottle cap and Dairy Crest rebottling its milk in eight-sided containers.

"From an environmental point of view, the new [octagonal] design uses about 15% less plastic than its standard equivalent across all the different sizes so it's better for the environment and the consumer," ​says Dairy Crest. "When designing the new bottle we also knew we could reduce its carbon footprint still further by making it partly from recycled plastic, in this case 15% recycled plastic mixed with virgin plastic."

Over at First Milk, the priority is to improve sustainability across the supply chain, not just in the co-operative's operations. "Even if we get it right, our operations only account for five per cent of the impact of the whole supply chain so we need to engage with farmers. We help them keep more money in their businesses by generating savings in energy, water and so on,"​ says group communications director Paul Flanagan. "We also want to include ethical considerations and economic sustainability."

For instance, First Milk is one of five organisations funding the Dairy 2020 initiative, which is looking to broaden the existing Dairy Roadmap beyond environmental issues and get every sector of the industry working towards a clear set of goals at the end of decade.

"It's facilitated by non-governmental organisation 'Forum for the Future' and includes people from right across industry, from farmers to retailers and academics. We held a series of workshops throughout 2011 looking to develop guiding principle action plans for each sector of the industry and we plan to share our outputs early in 2012,"​ says Flanagan.

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