Think dairy, and milk immediately comes to mind – and it’s a massive market. According to market research company Mintel the value of the milk market was £2.35bn in 2003, with volume at 4.6bn litres. Its figures show multiple grocers accounting for 64% of volume sales, with growth driven by their move into convenience and forecourt stores. The independent channel accounts for just 6.5% of volume sales but is a vital source for distress and top-up purchases. And even 6.5% of £2.35bn is quite a sizeable figure.
Mintel reports that the milk market is declining as consumption of milk products reduces. However, value-added products, such as flavoured milk and cream, are growing in size and are helping to offset the losses in white milk sales.
Within the milk market, semi-skimmed is the most popular variant, accounting for around 56% of volume sales, but it is skimmed that has the most potential for strong growth, as consumers move from full-fat and semi-skimmed.
Mike Allon, senior sales manager for Robert Wiseman Dairies, says cash and carries are an important market for his company. “In the past three years alone supply to this sector has grown by an additional 3.4 million gallons of milk per annum.”
He says one of the most interesting trends has been the emergence of branded milk: “Up until this year the market has been driven largely by commodity milks. However the launch of ‘the One’, our first branded 1% fat dairy product, has provided additional sales across the sector and is being well received by customers.
“This shows that while milk will by and large always be seen as a commodity product, there is a market for branded milk within this category. If you are an independent retailer who wants to increase choice and develop your milk category, or even a restaurant that wants to increase choice for its guests, having the option of a product such as ‘the One’ can be very appealing.
“Look at how the bread market has diversified over the past 20 years. There was a day when ‘bread was bread’, but now there are so many different varieties, so it will be interesting to see if milk can grow in this direction.”
The healthy eating trend is prevalent in foodservice too. Simon Muschamp, head of marketing at Pritchitts, says: “Evidence that caterers are responding to this can be seen from sales of Millac Maid, our one cup milk portion pots. Well over half of our Millac Maid sales are half fat, and this is an increasing trend.”
Another Pritchitts product enjoying strong sales is non-dairy Millac Gold. Muschamp says: “Millac Gold is in double digit growth and we believe the main reason for this is the functionality it offers over cream. For example, it never splits when used in cooking, even in acidic sauces, and it whips up to three times its volume – that’s 50% more than dairy cream. And when piped onto products it keeps its shape for much longer than cream, which tends to fall back. Millac Gold 30% is lower in fat than dairy cream, contains 25% less calories and is also 25% cheaper. It offers all this plus the long shelf life and ambient storage of a UHT product while tasting just like fresh cream.”
In 2004, the UK cheese market was valued at £1.83bn, up 16% since 2000. Volume has also grown, up 11% between 2000 and 2004, reaching 358,000 tonnes.
Cheddar is of course the UK’s favourite cheese but suppliers are keen for consumers to widen their repertoire which is why they have the Cheddar plus one initiative to encourage consumers to purchase at least one other type of cheese each time they shop for Cheddar. Individual UK consumption of cheese is 30g per person per day, which is 20g behind the European average. Mintel reckons the key to increasing consumption is “to develop incremental usage occasions beyond the usual lunchtime sandwich or the occasional cheese and crackers”. Suppliers have been quick to grasp this and as a result have created the cheese snacks sector. And while snacks targeted at children account for 90% of cheese snacks sold, adult-targeted snacks are the ones driving growth.
Cathedral City, the nation’s number one selling Cheddar brand, has launched a Lunch Pack for adults comprising four slices of Cheddar, four Jacob’s Cream Crackers, Branston Pickle and a spatula. The Lunch Pack is the latest in Cathedral City’s successful snacking product range and is expected to further reinforce the brand’s number one position in the UK Cheddar market. And Galbani has launched convenience tubs of Italian bite-sized cheese, while Kerry Foods has added a new soft cheese and cranberry variety to its Golden Vale Brunchettas cheese snacks range.
According to Mintel, Kraft’s Dairylea is the biggest brand in the cheese market, valued at £120m. Strong growth – 33% between 2002 and 2004 – is delivered through constant heavyweight support and lots of new product development. This means that as well as Dairylea Triangles the brand now offers spreads, Dunkers, Lunchables, Strip Cheese, Tri-Bites and Rippers. Kraft recently ran a price-marked pack promotion on Dairylea through cash and carries and wholesalers. Sarah Petts, channel and communications manager for Kraft Foods, says the company works with customers to tie such activity into “key brand timings for maximum success”.
She adds: “Our ongoing strategy is to continue to support price-marked packs for independent retailers as these are the fastest selling packs for them in small, convenient case sizes.”
IRI Infoscan data for the 52 weeks ending June 11, 2005 values the butter, spreads and margarine (BSM) market at £865m, up 3% year on year. UK consumers may be on something of a health kick, but it’s good old traditional block butter that is still the bigger seller within BSM, followed by spreadable versions of butter such as Anchor and Lurpak. Arla Foods reports that the key drivers within the market are taste and convenience for butter and spreadables, and health for low fat and functional spreads.
Anchor is the UK’s number one block butter brand, worth £37m; next comes Lurpak Classic, worth £32.5m. However it is Lurpak Spreadable, which claims to have all the taste of Classic but is spreadable, which is the number one BSM brand overall, worth £83m.
Meanwhile Flora boasts being the UK’s leading healthy spread brand. It was relaunched earlier this year with new packaging featuring the Omega-3 and Omega-6 oils logo. And Flora is enjoying great success with its pro.activ offshoot which includes a cholesterol-lowering spread, yogurt, milk drink and one-shot health drink.
Jonathan Bedford, spreads category controller at Unilever, comments: “Currently consumers have a heightened health awareness and are looking for products that can offer specific benefits. This represents a massive opportunity for brands like Flora pro.activ, which currently only represents a small part of our business through wholesale and cash and carry. By responding to these health trends, retailers can capitalise on the benefits offered by products such as Flora pro.activ cholesterol lowering and Flora pro.activ blood pressure controlling. Total Flora pro.activ brand sales are growing at 16.5% year on year, making it one of the UK’s fastest growing products.”
He says that cash and carries and wholesalers should be aware that Flora pro.activ 500g spread is now the third best selling branded SKU in the grocery multiples and where they lead independents follow.
According to Mintel, yogurt is one of the categories that will benefit most from the nation’s focus on health. Its 2004 report on yogurts says that’s because yogurt is innately healthy, and so will satisfy consumers looking for a sweet treat alternative to biscuits and confectionery.
The yogurt market is worth £1bn, with virtually fat-free yogurts accounting for most sales. Mintel reports that all sectors are in growth, but the children’s sector is struggling. Perversely that’s down to health issues too. “With impending legislation on advertising to children, and restrictions on the use of added sugar to manufactured food, this sector may face challenges in the future,” says the report. Meanwhile functional yogurt is the fastest-growing sector, driven by the popularity of probiotic products.
There has been a lot of movement in the supply structure of the yogurt market, with many brands and companies changing hands but Mintel reckons we are in a period of stability at present.
The UK’s leading yogurt manufacturer is Müller – the brand that promises consumers “a Müller life”. ACNielsen data for the four weeks ending July 05 gives the brand a 38.5% share of the yogurt market.
Müller has worked with cash and carry accounts on a number of range and display initiatives. Chris McDonough, Müller’s marketing director, says: “Our message on ranging is definitely ‘less is more’ – that stocking a tightly-selected range helps retailers select only the top-selling products in the category. By streamlining range, rate of sale has increased and wastage reduced – for both the cash and carry and the retailer.”
Müller worked with Batleys on its Category Driving project by giving market background and range ranking priorities to remove some of the mystery in the yogurts and desserts category. McDonough continues: “We developed a number of devices to assist the cash and carry customer to make the right buying decisions with things such as product lists containing core range advice, and posters featuring the top selling lines.
“Display has also been an area of focus, helping to signpost yogurts and desserts to the cash and carry customer, to reduce the risk of this category being missed. Display mechanisms from simple bus-stop signs, through to shelf edge strips and promotional barkers have all helped draw attention to the category within the cash and carry environment.”
As with all food categories, new product development drives sales of the yogurts and chilled desserts category. Müllerlight continues to deliver – its latest launch is a cherry bakewell tart flavour which aims to build on the success of the apple pie and lemon cheesecake flavours launched earlier this year.
And Onken, known best for its Biopot and Mousse ranges, recently entered the single serve yogurt sector with the launch of Smooch. It is made from a layer of fruit topped with yogurt and comes in cherry, raspberry and strawberry flavours.
Jo Seaford, chilled food buyer, Booker
The dairy sector as a whole is performing strongly with significant growth. Within fats, spreadable butters are showing growth year-on-year, as are healthy and wellbeing spreads. Milk products are also important, with flavoured varieties such as Frijj, Yazoo and Mars performing well.
Overall our top dairy sellers are Countrylife butter, Yazoo flavoured milk and butter portions.
Health has definitely influenced the products we list so we now offer things like Activia yogurts and Bertolli spreads.
We recently launched our Category Plan for Profits for dairy to give customers guidance on range, price, merchandising and promotions to ensure they are maximising their full potential from the category.
Kenton Burchell, MBL category manager for chilled
Consumers are trading up and looking for healthy eating options. They want products that are either good for you or have the perception that they are good for you. Premium products are a growth area too. Customers want value for money but at the same time they want quality and heritage, like our Londis Mature Cheddar, which is a prime example.
Best-selling dairy brands through Londis include Muller, Flora, Lurpak, Frijj, Yazoo, Actimel and Yeo Valley.
Londis offers a milk guarantee in some stores because independent convenience retailers know the importance of never running out of milk. It’s a core part of their business. We very rarely run out of milk. But the guarantee gives customers confidence, knowing that the milk supply is reliable. We work with the likes of Dairy Milk to ensure availability and flexibility are maximised.