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Added Value in Dairy Drinks, Milk and Cream - UK - April 2016

“Given shoppers’ willingness to boycott a milk where farmers are seen to not have received a fair price together with their uncertainty over which operators pay farmers fairly, there is a need for companies to make their credentials in this area tangible to consumers. ”

– Alice Baker, Research Analyst

This report looks at the following areas:

  • Ensuring fair pay for farmers is crucial to avoid a backlash
  • A focus on health could prove beneficial
  • On-the-go formats could help to re-engage younger consumers

This Report examines the UK retail market for milk, dairy drinks and cream, including products sold via doorstep delivery as well as retail outlets. Sales of milk within the catering and industrial sectors, as well as welfare milk supplies, are excluded, though reference may be made to these sectors where relevant.

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Table of contents

  1. Overview

    • What you need to know
      • Products covered in this Report
      • Executive Summary

          • The market
            • Falling farmgate milk prices affect the entire market
              • Values to remain down but slight volume growth to 2020
                • Figure 1: UK retail value sales of milk, milk drinks and cream, 2010-20
              • Cows’ milk dominates but strong growth in almond and coconut milk
                • Future of the market remains uncertain
                  • Companies and brands
                    • Own-label retains dominance in milk, but values down
                      • Figure 2: Leading brands’ shares in the UK retail white milk market, by value, 2014/15*
                    • Brands gain share in flavoured milk
                      • New propositions in white milk
                        • Arla dominates advertising spend but dairy-free brands up their activity
                          • The consumer
                            • Age bias in milk usage could inhibit future growth
                              • Figure 3: Usage of cows’ milk and alternative milk drinks, February 2016
                            • 55% of milk users are willing to pay more than the supermarkets charge
                              • Figure 4: How much milk users would pay for 4 pints (2.272 litres) of milk, February 2016
                            • Only half of milk buyers are swayed by price
                              • Figure 5: Factors considered important when buying milk, February 2016
                            • Healthier and on-the-go versions could re-energise the category
                              • Figure 6: Interest in new concepts in milk, milk drinks and cream, February 2016
                            • Further push on health could help burnish milk’s image
                              • Figure 7: Attitudes towards milk, milk drinks and cream, February 2016
                            • Imperative need to promote farmer relations
                              • Figure 8: Attitudes towards buying milk, February 2016
                            • What we think
                            • Issues and Insights

                              • Ensuring fair pay for farmers is crucial to avoid a backlash
                                • The facts
                                  • The implications
                                    • A focus on health could prove beneficial
                                      • The facts
                                        • The implications
                                          • On-the-go formats could help to re-engage younger consumers
                                            • The facts
                                              • The implications
                                              • The Market – What You Need to Know

                                                • Falling farmgate milk prices affect the entire market
                                                  • Values to remain down but slight volume growth to 2020
                                                    • Cows’ milk dominates but strong growth in almond and coconut milk
                                                      • Cooking supports culinary cream
                                                        • International dairy market remains a source of uncertainty
                                                          • New dietary guidelines reduce dairy recommendation
                                                          • Market Size and Forecast

                                                            • Falling milk prices exert influence over entire market
                                                              • Figure 9: UK retail value sales of white milk*, cream and flavoured milk, by segment, 2010-20
                                                              • Figure 10: UK retail volume sales of white milk*, cream and flavoured milk, by segment, 2010-20
                                                            • No value recovery imminent
                                                              • Figure 11: UK retail value sales of milk, milk drinks and cream, 2010-20
                                                            • White milk values down but volumes slightly up
                                                              • No ‘quick-fix’ solution for milk prices on the horizon
                                                                • Figure 12: UK retail value sales of white milk, 2010-20
                                                              • Health concerns affect cream
                                                                • Figure 13: UK retail value sales of cream, 2010-20
                                                              • Strong growth potential for flavoured milk
                                                                  • Figure 14: UK retail value sales of flavoured milk, 2010-20
                                                                • Forecast methodology
                                                                • Market Segmentation

                                                                  • Cows’ milk values down but volume sales up
                                                                    • Figure 15: UK retail value sales of white milk, by fresh and long-life, 2014-15
                                                                    • Figure 16: UK retail volume sales of white milk, by fresh and long-life, 2014-15
                                                                  • Cows’ milk dominates but almond and coconut milk growing strongly
                                                                    • Figure 17: UK retail value sales of white milk, by type, 2014-15
                                                                    • Figure 18: UK retail volume sales of white milk, by type, 2014-15
                                                                  • Volume growth for goats’ milk
                                                                    • Organic milk yet to see benefit of rising incomes
                                                                      • Double cream sees volume growth despite health trend
                                                                        • Figure 19: UK retail value sales of cream, by type, 2014-15
                                                                        • Figure 20: UK retail volume sales of cream, by type, 2014-15
                                                                      • Scratch cooking trend benefits culinary creams
                                                                        • New varieties boost flavoured milk
                                                                          • Lack of innovation impedes milk modifiers
                                                                            • Figure 21: UK retail value sales of flavoured milk, milk smoothies and milk flavourings, 2014-15
                                                                            • Figure 22: UK retail volume sales of flavoured milk, milk smoothies and milk flavourings, 2014-15
                                                                        • Market Drivers

                                                                          • Weak milk export demand puts downward pressure on prices
                                                                            • Supermarket price wars fuel retail price deflation
                                                                              • ‘Brexit’ debate raises further uncertainty
                                                                                • Need to engage younger consumers
                                                                                  • New government health advice cuts dairy intake recommendation
                                                                                    • Sugar tax could benefit dairy drinks
                                                                                    • Companies and Brands – What You Need to Know

                                                                                      • Own-label retains dominance in white milk but values fall
                                                                                        • Brands gain share in flavoured milk
                                                                                          • New propositions in white milk
                                                                                            • Arla dominates advertising spend but dairy-free brands up their activity
                                                                                            • Market Share

                                                                                              • Own-label continues to dominate white milk
                                                                                                • Figure 23: Leading brands’ sales and shares in the UK white milk market, by value and volume, 2013/14-2014/15
                                                                                                • Figure 24: Leading manufacturers’ sales and shares in the UK white milk market, by value and volume, 2013/14-2014/15
                                                                                              • Expansion of free-from market boosts Alpro
                                                                                                • Sale of Dairy Crest’s milk and cream business to Müller ends 2015
                                                                                                  • Distribution gains see Graham’s grow
                                                                                                    • Own-label remains dominant in cream
                                                                                                      • Figure 25: Leading brands’ sales and shares in the UK cream market, by value and volume, 2013/14-2014/15
                                                                                                      • Figure 26: Leading manufacturers’ sales and shares in the UK cream market, by value and volume, 2013/14-2014/15
                                                                                                    • Own-label loses market share in flavoured milk
                                                                                                      • Figure 27: Leading brands’ sales and shares in the UK flavoured milk market, by value and volume, 2013/14-2014/15
                                                                                                      • Figure 28: Leading manufacturers’ sales and shares in the UK flavoured milk market, by value and volume, 2013/14-2014/15
                                                                                                    • Mixed results for Mars brands
                                                                                                      • Weetabix adds £8 million
                                                                                                      • Launch Activity and Innovation

                                                                                                        • Little NPD in white cows’ milk
                                                                                                          • Figure 29: New product launches in the UK milk, dairy drinks and cream market, by sub-category, 2011-15
                                                                                                        • Arla targets the health-aware through Best of Both Milk
                                                                                                          • Morrisons launches Milk for Farmers
                                                                                                            • Flavoured milk brands look to flavour innovation to win new users
                                                                                                              • Inspiration from the dessert category
                                                                                                                • Coffee flavours
                                                                                                                  • High-protein proposition
                                                                                                                    • Further potential for low-sugar flavoured milk
                                                                                                                      • Growth in dairy-free
                                                                                                                        • Figure 30: New product launches in the UK milk, dairy drinks and cream market, by top 20 claims, 2011-15
                                                                                                                    • Advertising and Marketing Activity

                                                                                                                      • Arla has the lion’s share of adspend in 2015
                                                                                                                        • Figure 31: Total above-the line, online display and direct mail advertising expenditure on milk, milk drinks & cream (sorted by top ten advertisers in 2015), 2011-15
                                                                                                                      • Focus on the Cravendale brand
                                                                                                                        • First Lactofree television advert for three years
                                                                                                                          • White Wednesdays: TV advert promotes farmers’ contribution
                                                                                                                            • White Wednesdays: Public events raise profile further
                                                                                                                              • Best of Both Milk focuses on joy
                                                                                                                                • Alpro and Blue Diamond boost plant-based milk adspend
                                                                                                                                  • Alpro promotes general health benefits to appeal to a wide audience
                                                                                                                                    • Nielsen Media Research coverage
                                                                                                                                    • The Consumer – What You Need to Know

                                                                                                                                      • Age bias in milk usage could inhibit future growth
                                                                                                                                        • 55% of milk users are willing to pay more than the supermarkets charge
                                                                                                                                          • Only half of milk buyers are swayed by price
                                                                                                                                            • Healthier and on-the-go versions could re-energise the category
                                                                                                                                              • Further push on health could help burnish milk’s image
                                                                                                                                                • Consumers divided on plant-based milks
                                                                                                                                                  • Imperative need to promote farmer relations
                                                                                                                                                  • Usage of Milk

                                                                                                                                                    • Standard cows’ milk remains most popular but has ageing user base
                                                                                                                                                      • Figure 32: Usage of cows’ milk and alternative milk drinks, February 2016
                                                                                                                                                    • Plant-based milks attract young & affluent user base
                                                                                                                                                      • Plant-based milks more popular among women than men
                                                                                                                                                        • Semi-skimmed the most commonly used milk type
                                                                                                                                                          • Figure 33: Usage of milk and milk drinks, by type, February 2016
                                                                                                                                                        • Whole milk appeals to families but not over-55s
                                                                                                                                                        • Usage of Cream

                                                                                                                                                          • Lack of versatility limits cream usage
                                                                                                                                                            • Encouraging more varied use of cream
                                                                                                                                                              • Figure 34: Usage of cream, by type, February 2016
                                                                                                                                                            • Double cream the most commonly used cream type
                                                                                                                                                              • Plant-based cream usage low
                                                                                                                                                              • How Much Consumers Are Prepared to Pay for Milk

                                                                                                                                                                • 55% are willing to pay more than the supermarkets charge for milk
                                                                                                                                                                  • 27% are willing to spend £1.50 or more
                                                                                                                                                                      • Figure 35: How much milk users would pay for 4 pints (2.272 litres) of milk, February 2016
                                                                                                                                                                  • Factors Considered Important When Buying Milk

                                                                                                                                                                    • Buyers divided on price
                                                                                                                                                                      • Figure 36: Factors considered important when buying milk, February 2016
                                                                                                                                                                    • Ethical claims could be a differentiator
                                                                                                                                                                      • Farmers’ pay provokes reactions among many
                                                                                                                                                                        • Companies look to leverage their support to farmers
                                                                                                                                                                          • Welfare claims spark minority interest
                                                                                                                                                                            • Specific animal welfare claims could help to differentiate products
                                                                                                                                                                            • Interest in New Concepts

                                                                                                                                                                              • Fortified milk interests one in five
                                                                                                                                                                                • Figure 37: Interest in new concepts in milk, milk drinks and cream, February 2016
                                                                                                                                                                              • Reduced-sugar flavoured milk interests one in four parents
                                                                                                                                                                                • Scope for NPD in on-the-go milk
                                                                                                                                                                                • Attitudes towards Milk, Dairy Drinks & Cream

                                                                                                                                                                                  • Milk still seen as providing health benefits
                                                                                                                                                                                    • Minority recognise milk’s credentials in hydration
                                                                                                                                                                                      • Opinion divided on plant-based milks on health
                                                                                                                                                                                        • Few see plant-based milk as excelling on taste
                                                                                                                                                                                          • Figure 38: Attitudes towards milk, milk drinks and cream, February 2016
                                                                                                                                                                                      • Attitudes towards Buying Milk

                                                                                                                                                                                        • Confusion over farmers’ pay
                                                                                                                                                                                          • Operators take different routes to reassuring shoppers
                                                                                                                                                                                            • Figure 39: Attitudes towards buying milk, February 2016
                                                                                                                                                                                          • Need to ensure good supplier relations or risk backlash
                                                                                                                                                                                            • Women show the greatest concern for farmers
                                                                                                                                                                                            • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                                                                                • Abbreviations
                                                                                                                                                                                                  • Consumer research methodology
                                                                                                                                                                                                  • Appendix – Market Size and Forecast

                                                                                                                                                                                                      • Figure 40: Best- and worst-case forecasts for retail value sales of milk, milk drinks and cream 2015-20
                                                                                                                                                                                                      • Figure 41: Best- and worst-case forecasts for UK retail volume sales of milk, milk drinks and cream 2015-20
                                                                                                                                                                                                      • Figure 42: Best- and worst-case forecasts for UK retail value sales of white milk 2015-20
                                                                                                                                                                                                      • Figure 43: Best- and worst-case forecasts for UK retail volume sales of white milk 2015-20
                                                                                                                                                                                                      • Figure 44: Best- and worst-case forecasts for UK retail value sales of cream 2015-20
                                                                                                                                                                                                      • Figure 45: Best- and worst-case forecasts for UK retail volume sales of cream 2015-20
                                                                                                                                                                                                      • Figure 46: Best- and worst-case forecasts for UK retail value sales of flavoured milk 2015-20
                                                                                                                                                                                                      • Figure 47: Best- and worst-case forecasts for UK retail volume sales of flavoured milk 2015-20
                                                                                                                                                                                                      • Figure 48: UK retail volume sales of white milk, 2010-20
                                                                                                                                                                                                      • Figure 49: UK retail volume sales of cream, 2010-20
                                                                                                                                                                                                      • Figure 50: UK retail volume sales of flavoured milk, 2010-20
                                                                                                                                                                                                    • Forecast Methodology
                                                                                                                                                                                                    • Appendix – Advertising & Marketing

                                                                                                                                                                                                        • Figure 51: Total above-the line, online display and direct mail advertising expenditure on milk, milk drinks & cream, by segment 2011-15

                                                                                                                                                                                                    Companies Covered

                                                                                                                                                                                                    To learn more about the companies covered in this report please contact us.

                                                                                                                                                                                                    Added Value in Dairy Drinks, Milk and Cream - UK - April 2016

                                                                                                                                                                                                    £1,995.00 (Excl.Tax)