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Added Value in Dairy Drinks, Milk and Cream - UK - May 2015

"The dairy drinks, milk and cream market faces challenges on several fronts at present, including for example, the maturity of the white milk segment, the ongoing grocery retailer milk price wars, concerns over sugar (flavoured milk) and the macro trend towards healthier products (cream)."

This report covers the following issues:

  • Time to launch a 'fair pay' standard for British milk?
  • Placing standard white milk under retailers' economy ranges could help them build category value
  • Flavoured milks must combat health concerns to stem decline

The dairy drinks, milk and cream market faces challenges on several fronts at present, including for example, the maturity of the white milk segment, the ongoing grocery retailer milk price wars, concerns over sugar (flavoured milk) and the macro trend towards healthier products (cream).

Research for this report identifies ways in which operators can seek to build value back into the market, with fortified milks, chocolate confectionery-branded flavoured creams and more subtly flavoured milks proving popular with users.

Building value is vital, particularly given the structural changes in the market which could further commoditise the market. 2015 is an important year in terms of the structure of the market, with the ending of EU milk quotas and major consolidation in the form of Müller Wiseman’s proposed purchase of Dairy Crest’s Dairies division currently going through the regulatory process.

This report examines the UK retail market for milk and cream, including products sold via doorstep delivery as well as through retail outlets. Sales of milk within the catering and industrial sectors, as well as welfare milk supplies, unless otherwise stated, are excluded.


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Table of contents

  1. Overview

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

          • The market
            • Sales decline in 2014
              • Figure 1: Market size and forecast of the dairy drinks, milk and cream market, by value, 2009-19
            • The consumer
              • Chilled cow’s milk dominates the market
                • Figure 2: Types of milk/milk drinks used in the last three months, February 2015
              • Cold cereal is the most popular use for milk
                • Figure 3: Milk/milk drinks usage occasions in the last three months, February 2015
              • Cream is most popular as a dessert/cake accompaniment
                • 51% of consumers would pay more than £1 for a four-pint bottle of milk
                  • Figure 4: How much milk users would pay for a four-pint bottle of milk, February 2015
                • Fortified milks popular with one in four milk users
                  • Figure 5: Interest in selected milk/milk drink and cream product concepts, February 2015
                • Filtered milk fails to resonate with consumers
                  • Figure 6: Agreement with selected attitudes towards milk, milk drinks and cream, February 2015
                • Companies, Brands and Innovation
                  • White milk market dominated by own-label
                    • Figure 7: Leading manufacturers’ shares of the UK white milk market^ by value, 2014/15*
                  • Dairy alternatives and lactose-free milks in fast growth
                    • Arla launches Big Milk aimed at kids
                    • Issues and Insights

                      • Time to launch a ‘fair pay’ standard for British milk?
                        • The facts
                          • The implications
                            • Placing standard white milk under retailers’ economy ranges could help them build category value
                              • The facts
                                • The implications
                                  • Flavoured milks must combat health concerns to stem decline
                                    • The facts
                                      • The implications
                                      • The Market – What You Need to Know

                                        • Milk price wars continue to erode fresh white milk value
                                          • Total market value forecast to continue its decline
                                            • Whole milk sees best volume performance
                                              • Cow’s milk alternatives buoy fresh white milk volumes
                                                • Farmgate milk prices fall in 2014
                                                  • EU milk production quotas abolished from spring 2015
                                                    • Products which milk is used with, such as breakfast cereals, see sales declines
                                                    • Market Size and Forecast

                                                      • White milk falls back into value decline following grocer price cuts
                                                        • Figure 8: UK retail sales of dairy drinks, milk and cream, by value, by main segment, 2009-19
                                                        • Figure 9: UK retail sales of dairy drinks, milk and cream, by volume, by main segment, 2009-19
                                                      • Flat white milk volumes
                                                        • Total market volume forecast to climb against falling value
                                                          • Figure 10: UK retail sales and forecast of dairy drinks, milk and cream, by value, 2009-19
                                                          • Figure 11: UK retail sales and forecast of dairy drinks, milk and cream, by volume, 2009-19
                                                      • Segment Performance

                                                        • White milk
                                                          • Figure 12: Retail sales of white milk (fresh and long-life), by type, by value and volume, 2013 and 2014
                                                        • Whole milk sees greatest increase in volume
                                                          • Figure 13: Retail sales of fresh white milk, by type, by value and volume, 2013 and 2014
                                                        • Flavoured milk
                                                          • Cream
                                                            • Figure 14: Retail sales of cream, by type, by value and volume, 2013 and 2014
                                                        • Market Drivers

                                                          • Farmgate milk prices fall sharply in 2014
                                                            • Figure 15: UK farmgate milk prices, 2010-14
                                                          • Uncertainty over impact of abolition of EU milk quotas on UK milk market
                                                            • Little growth from products typically eaten/drunk with milk
                                                            • Key Players – What You Need to Know

                                                              • Own-label accounts for three quarters of white milk market value
                                                                • Müller Wiseman set to acquire Dairy Crest’s Dairies division
                                                                  • FRijj launches lower-sugar variants
                                                                    • Own-label accounts for 70% of cream market value
                                                                      • Adspend on milk, milk drinks and cream up 40% year-on-year
                                                                        • Booths rebrands its own-label milk ‘Fair Milk’
                                                                          • Global launches include milk-based energy drinks and ‘ultra-filtered’ milk
                                                                            • Lighter cream and cream alternative launches continue apace
                                                                            • Market Share

                                                                              • Cream
                                                                                • Figure 16: Leading brands’ sales in the UK cream market, by value, 2013/14 and 2014/15
                                                                                • Figure 17: Leading manufacturers’ sales in the UK cream market, by value, 2013/14 and 2014/15
                                                                              • Flavoured milk
                                                                                • Figure 18: Leading brands’ sales in the UK flavoured milk market, by value, 2013/14 and 2014/15
                                                                                • Figure 19: Leading manufacturers’ sales in the UK flavoured milk market, by value, 2013/14 and 2014/15
                                                                              • FRijj remains market leader in flavoured milk
                                                                                • Müller set to re-enter UK flavoured milk market through purchase of FRijj
                                                                                  • All change for Arla in flavoured milk
                                                                                    • White milk
                                                                                      • Figure 20: Leading brands’ sales in the UK white milk^ market, by value, 2013/14 and 2014/15
                                                                                      • Figure 21: Leading manufacturers’ sales in the UK white milk^ market, by value, 2013/14 and 2014/15
                                                                                    • Dairy Crest sells its liquid milk business to Müller Wiseman…
                                                                                      • …as Graham’s The Family Dairy becomes a more sizeable competitor
                                                                                        • Alpro sees sales surge after wave of NPD
                                                                                          • Cravendale struggles
                                                                                            • But increased Morrisons supply and the launch of Big Milk should boost Arla’s milk sales
                                                                                            • Brand Communication and Promotion

                                                                                              • 2014 adspend up 40% year on year
                                                                                                • Figure 22: Share of adspend on milk, milk, drinks and cream, by category, 2011-14
                                                                                              • Arla is the biggest spender on ad space in the market in 2014
                                                                                                • Figure 23: Top 10 advertisers in the dairy drinks, milk and cream market, 2011-14
                                                                                              • Arla asks consumers to support farmers by buying its products
                                                                                                • Retailers move to promote the ‘fairness’ of their milk procurement in 2015
                                                                                                  • Weetabix spends big on launch campaign
                                                                                                    • Figure 24: Top 10 brands, by adspend in the dairy drinks, milk and cream market, 2011-14
                                                                                                  • Alpro more than doubles adspend in 2014
                                                                                                  • Launch Activity and Innovation

                                                                                                    • White milk accounts for just a third of new launches in the market
                                                                                                      • Figure 25: New product launches within the UK dairy drinks and milk market, by sub-category, 2011-14
                                                                                                    • Arla leads new launches in 2014
                                                                                                      • Kids get new milk drinks with added convenience
                                                                                                        • Growth in allergen claims reflects strong growth in dairy alternatives
                                                                                                          • Figure 26: New product launches within the UK dairy drinks and milk and market, by top 10 claims, 2011-14
                                                                                                        • Coca-Cola launches new premium milk in US
                                                                                                          • Booths rebrands its own-label milk as Fair Milk
                                                                                                            • Healthier creams and cream alternative launches continue apace
                                                                                                              • Retailers use flavoured creams as a differentiator during seasonal events
                                                                                                              • The Consumer – What You Need to Know

                                                                                                                • Penetration of milk and milk drinks stands at 94%
                                                                                                                  • Cold cereal is the most popular use for milk
                                                                                                                    • Usage of cream/buttermilk stands at 60%
                                                                                                                      • Half of standard milk users willing to pay over £1 for a four pint bottle
                                                                                                                        • Fortified milks spark interest amongst a significant minority of users
                                                                                                                          • Flavoured milk with a hint of flavour could help combat sugar concerns
                                                                                                                            • Most consumers don’t see filtered milk’s main selling point
                                                                                                                              • Cream faces competition from yogurt
                                                                                                                              • Usage of Milk/Milk Drinks and Cream

                                                                                                                                • Usage of milk/milk drinks
                                                                                                                                  • Figure 27: Types of milk/milk drinks used in the last three months, February 2015
                                                                                                                                • More than nine in 10 Brits drink milk
                                                                                                                                  • Semi-skimmed milk is most widely used milk type
                                                                                                                                    • Figure 28: Types of milk/milk drinks used in the last three months, February 2015
                                                                                                                                  • Usage of cream and buttermilk
                                                                                                                                    • Figure 29: Usage of cream and buttermilk in the last three months, February 2015
                                                                                                                                • Usage Occasions for Milk/Milk Drinks and Cream

                                                                                                                                  • With cold cereal is most popular usage occasion for milk/milk drinks
                                                                                                                                    • Figure 30: Milk/milk drinks usage occasions in the last three months, February 2015
                                                                                                                                  • Mixed fortunes of hot drinks could impact milk usage in different ways
                                                                                                                                    • Cream is most popular as a dessert/cake accompaniment
                                                                                                                                      • Figure 31: Cream usage occasions in the last three months, February 2015
                                                                                                                                  • How Much Consumers are Prepared to Pay for Milk

                                                                                                                                      • Figure 32: How much milk users would pay for a four-pint bottle of milk, February 2015
                                                                                                                                  • Interest in Milk/Milk Drink and Cream Product Concepts

                                                                                                                                      • Figure 33: Interest in selected milk/milk drink and cream product concepts, February 2015
                                                                                                                                    • High interest in functional milks/milk drinks
                                                                                                                                      • One in four interested in milk from cows fed only on grass and hay
                                                                                                                                        • Scope for chocolate confectionery brands to extend into fresh creams
                                                                                                                                          • Milk with a hint of flavour appeals to one in five
                                                                                                                                            • Milk with cream sitting on top appeals to one in six
                                                                                                                                              • Scope for alcohol brands to extend into milk category
                                                                                                                                              • Attitudes towards Milk/Milk Drinks and Cream

                                                                                                                                                  • Figure 34: Agreement with selected attitudes towards milk, milk drinks and cream, February 2015
                                                                                                                                                • Two thirds of consumers see yogurt as healthier than cream
                                                                                                                                                  • Filtered milk brands must do more to educate consumers
                                                                                                                                                    • 49% of consumers agree supermarkets should sell economy fresh milk
                                                                                                                                                      • Milk could learn from single-variety teas and wines
                                                                                                                                                      • Appendix – Data Sources and Abbreviations

                                                                                                                                                        • Data sources
                                                                                                                                                          • Fan chart forecast
                                                                                                                                                            • Abbreviations
                                                                                                                                                              • Consumer research methodology
                                                                                                                                                              • Appendix – Launch Activity and Innovation

                                                                                                                                                                  • Figure 35: New product launches within the UK dairy drinks and milk market, by branded/own-label share, 2011-14
                                                                                                                                                                  • Figure 36: New product launches within the UK dairy drinks and milk and market, by top 10 ultimate owner companies, 2011-14
                                                                                                                                                              • Appendix – Market Size and Forecast

                                                                                                                                                                • Total market
                                                                                                                                                                  • Figure 37: UK retail sales of dairy drinks, milk and cream, by value and volume, 2009-19
                                                                                                                                                                  • Figure 38: Best- and worst-case forecasts for the UK dairy drinks, milk and cream market, by value, 2014-19
                                                                                                                                                                  • Figure 39: Best- and worst-case forecasts for the UK dairy drinks, milk and cream market, by volume, 2014-19
                                                                                                                                                                • White milk
                                                                                                                                                                  • Figure 40: UK retail sales of white milk (fresh and long-life), by value and volume, 2009-19
                                                                                                                                                                  • Figure 41: UK retail sales and forecast of white milk (fresh and long-life), by value, 2009-19
                                                                                                                                                                  • Figure 42: UK retail sales and forecast of white milk (fresh and long-life), by volume, 2009-19
                                                                                                                                                                  • Figure 43: Best- and worst-case forecasts for the UK white milk (fresh and long-life) market, by value, 2014-19
                                                                                                                                                                  • Figure 44: Best- and worst-case forecasts for the UK white milk (fresh and long-life) market, by volume, 2014-19
                                                                                                                                                                • Flavoured milk
                                                                                                                                                                  • Figure 45: UK retail sales of flavoured milk, by value and volume, 2009-19
                                                                                                                                                                  • Figure 46: UK retail sales and forecast of flavoured milk, by value, 2009-19
                                                                                                                                                                  • Figure 47: UK retail sales and forecast of flavoured milk, by volume, 2009-19
                                                                                                                                                                  • Figure 48: Best- and worst-case forecasts for the UK flavoured milk market, by value, 2014-19
                                                                                                                                                                  • Figure 49: Best- and worst-case forecasts for the UK flavoured milk market, by volume, 2014-19
                                                                                                                                                                • Cream
                                                                                                                                                                  • Figure 50: UK retail sales of cream, by value and volume, 2009-19
                                                                                                                                                                  • Figure 51: UK retail sales and forecast of cream, by value, 2009-19
                                                                                                                                                                  • Figure 52: UK retail sales and forecast of cream, by volume, 2009-19
                                                                                                                                                                  • Figure 53: Best- and worst-case forecasts for the UK cream market, by value, 2014-19
                                                                                                                                                                  • Figure 54: Best- and worst-case forecasts for the UK cream market, by volume, 2014-19

                                                                                                                                                              Companies Covered

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

                                                                                                                                                              Added Value in Dairy Drinks, Milk and Cream - UK - May 2015

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