Focusing on premium products could help the industry add much-needed value to the liquid milk sector, said Richard Ford, Mintel’s senior food analyst. “Value has been torn out of the UK milk market in recent years as a result of the grocery retailer price wars,” said Ford.
“But products such as fortified milk and milk from grass-fed cows could help operators build value back into the market. There is scope for operators to move away from the relentless price cuts in the milk industry without alienating shoppers.”
More than a quarter (27%) of shoppers buying milk, milk drinks or creams said they’d be interested in trying milk with added vitamins, such as vitamin D. About a quarter would be interested in trying milk containing more calcium than normal.
Milk containing more calcium
Also, 27% reported interest in milk from cows that have only been fed grass or hay, rising to over a third (34%) in the south west of the country.
Value sales of fresh lactose-free milk soared 18% in the past year from £22M in 2013 to an estimated £26M last year.
And Mintel research revealed consumers would be prepared to pay more for the white stuff. Of the 85% of consumers who drink standard cow’s milk, just over half (51%) would be prepared to pay more than £1 for a four-pint bottle of milk. On average, users would be willing to pay £1.28 for a bottle of this size, which usually sells at 89p–£1.00.
“Value has been torn out of the UK milk market in recent years as a result of the grocery retailer price wars.”
- Richard Ford, Mintel
Extra value that could be added would be a welcome means of offsetting falling milk sales. The retail value sales of white milk were predicted to have fallen by 5%, from £3.49bn in 2013 to an estimated £3.34bn last year.
Sales were predicted to fall further this year to £3.26bn. Volume sales of white milk were expected to have stagnated at 5.11bn litres between 2013 and 2014.
‘Pockets of strong growth’
Despite the decline, Mintel claimed to have identified “pockets of strong growth”.
Value sales of fresh lactose-free milk soared 18% in the past year from £22M in 2013 to an estimated £26M last year. Sales of fresh dairy alternatives rocketed by 31% from £48M in 2013 to an estimated £63M in 2014.
Revealing a growing focus on non-dairy by manufacturers and retailers, one-in-four (23%) launches in the UK dairy drinks and milk market were rice, nut, grain and seed-based drinks last year. That compared with just 2% in 2011. White dairy milk launches accounted for just over a third (34%) of launches in 2014.
“The low share of white dairy milk launches – despite the segment’s sales dominance – reflects the limited scope for product development, while also highlighting the fast growth in launches of dairy alternatives,” said Ford.
“As the market matures, the range of drinks made with more unusual seeds, grains and nuts is likely to expand with products using ingredients such as spelt and quinoa, such products already being available in international markets.”
Milking the market
- Retail value sales of white milk predicted to have fallen 5%, from £3.49bn in 2013 to £3.34bn last year.
- Sales were predicted to fall further this year to £3.26bn.
- Volume sales of white milk were expected to have stagnated at 5.11bn litres between 2013 and 2014.
- Interest in non-dairy alternatives
Milk on trend
- Consumer interest in fortified milk and milk from grass-fed cows
- Consumer willingness to pay more for four pint bottles