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Added Value in Dairy Drinks, Milk and Cream - UK - May 2017

“While it might be tempting for supermarkets to renew hostilities in their milk price wars as household disposable incomes come under pressure, this could prove a double-edged sword. Many shoppers see milk price cuts as disadvantaging farmers and are consequently prepared to boycott milk from a supermarket seen to be undertaking these. However, consumer interest in farmers’ pay also means that those companies able to demonstrate good credentials here stand to benefit.”

Alice Baker, Research Analyst

This report looks at the following areas:

  • Shoppers' concerns over farmers' pay make it imperative for retailers to make good supplier relations tangible on-pack
  • Minimal antibiotics guarantees have strong scope to appeal
  • Smaller cream formats and recipe suggestions should help to allay food waste concerns

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Table of contents

  1. Overview

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

          • The market
            • Weakness of white milk continues to overshadow the category
              • Some inflation for all segments 2017-21
                • Mixed picture for volume sales 2017-21
                  • Figure 1: UK retail value sales of milk, milk drinks and cream, 2011-21
                • Cow’s milk volume sales falter in 2016
                  • Multiple factors boost flavoured milk
                    • Uncertainties linger over milk prices
                      • Antibiotic use comes under closer government scrutiny
                        • Companies and brands
                          • Own-label retains dominance in white milk and strengthens hold on cream
                            • Figure 2: UK retail sales of white milk*, by leading brands, by value, 2016
                          • Leading flavoured milk brands fail to benefit from growth in the market
                            • Retailers and brands highlight ethics
                              • White milk leads on L/N/R sugar claims in 2016
                                • Advertising spend rises in 2016
                                  • Arla remains the largest advertiser, with a strong focus on versatility
                                    • The consumer
                                      • Cow’s milk needs to woo younger consumers
                                        • Figure 3: Usage of milk, by type, February 2017
                                      • Flavoured milk usage rises
                                        • Health and food waste concerns restrict cream usage
                                          • Majority of users would pay more for milk than supermarkets charge
                                            • Figure 4: How much milk users would pay for 4 pints (2.272 litres) of milk, February 2017
                                          • References by glass could help to boost usage of milk as a source of calcium
                                            • Guarantees of minimal antibiotics have wide appeal
                                              • Figure 5: Behaviours relating to milk, milk drinks and cream, February 2017
                                            • Milk price cuts risk a backlash, good supplier relations appeal
                                              • Clearer sugar labelling for flavoured milk valued by many users
                                                • Figure 6: Attitudes towards milk, dairy drinks and cream, February 2017
                                              • Stronger emphasis on vitamins could enhance milk’s health image
                                                • What we think
                                                • Issues and Insights

                                                  • Shoppers’ concerns over farmers’ pay make it imperative for retailers to make good supplier relations tangible on-pack
                                                    • The facts
                                                      • The implications
                                                        • Minimal antibiotics guarantees have strong scope to appeal
                                                          • The facts
                                                            • The implications
                                                              • Smaller cream formats and recipe suggestions should help to allay food waste concerns
                                                                • The facts
                                                                  • The implications
                                                                  • The Market – What You Need to Know

                                                                    • Weakness of white milk continues to overshadow the category
                                                                      • Some inflation for all segments 2017-21
                                                                        • Mixed picture for volume sales 2017-21
                                                                          • Cow’s milk volume sales falter in 2016
                                                                            • Multiple factors boost flavoured milk
                                                                              • Uncertainties linger over milk prices
                                                                                • Antibiotic use comes under closer government scrutiny
                                                                                • Market Size and Forecast

                                                                                  • Troubles of white milk continue to overshadow the category
                                                                                    • Figure 7: UK retail value sales of white milk*, cream and flavoured milk, by segment, 2011-21
                                                                                    • Figure 8: UK retail volume sales of white milk*, cream and flavoured milk, by segment, 2011-21
                                                                                  • Slow growth with some inflation 2017-21
                                                                                    • Figure 9: UK retail value sales of milk, milk drinks and cream, 2011-21
                                                                                  • Little movement for white milk over 2017-21
                                                                                    • Retailer price competition to dilute effects of inflation
                                                                                      • Volume sales growth to remain sluggish
                                                                                        • Figure 10: UK retail value sales of white milk, 2011-21
                                                                                      • Consumer health concerns will continue to affect cream over 2017-21
                                                                                        • Figure 11: UK retail values sales of cream, 2011-21
                                                                                      • Soft drinks levy should boost flavoured milk, but health concerns and price rises present barriers to sales
                                                                                        • Figure 12: UK retail value sales of flavoured milk, 2011-21
                                                                                      • Forecast methodology
                                                                                      • Market Segmentation

                                                                                        • Cow’s milk volume sales slide in 2016
                                                                                          • Figure 13: UK retail value sales of white milk, by fresh and longlife, 2014-16
                                                                                          • Figure 14: UK retail volume sales of white milk, by fresh and longlife, 2014-16
                                                                                        • Almond and coconut milks continue their rapid growth
                                                                                          • Figure 15: UK retail value sales of white milk, by type, 2014-16
                                                                                          • Figure 16: UK retail volume sales of white milk, by type, 2014-16
                                                                                        • Consumer health concerns erode double cream sales in 2016
                                                                                          • Sour cream continues to benefit from world food trends
                                                                                            • Figure 17: UK retail value sales of cream, by type, 2014-16
                                                                                            • Figure 18: UK retail volume sales of cream, by type, 2014-16
                                                                                          • Multiple factors boost flavoured milk
                                                                                            • Lack of innovation prevents milk modifiers from benefitting from sugar concerns
                                                                                              • Figure 19: UK retail value sales of flavoured milk, milk smoothies and milk flavourings, 2014-16
                                                                                              • Figure 20: UK retail volume sales of flavoured milk, milk smoothies and milk flavourings, 2014-16
                                                                                          • Market Drivers

                                                                                            • Multiple factors affect milk prices
                                                                                              • Brexit vote raises multiple uncertainties
                                                                                                • Pound’s depreciation could lead to inflation for plant-based and flavoured milks
                                                                                                  • Need for dairy industry to win over younger consumers
                                                                                                    • Soft drinks sugar levy could give a boost to flavoured milk
                                                                                                      • …but industry will still be required to reduce sugar
                                                                                                        • …and health concerns could still limit opportunities to grow volume sales
                                                                                                          • EFSA rules make it difficult for dairy drinks to make a low-sugar claim
                                                                                                            • Government advice on Vitamin D provides opportunities for fortified milk
                                                                                                              • Antibiotic use comes under closer government scrutiny
                                                                                                              • Companies and Brands – What You Need to Know

                                                                                                                • Own-label retains dominance in white milk and cream
                                                                                                                  • Leading flavoured milk brands fail to benefit from growth in the market
                                                                                                                    • Retailers and brands highlight ethics
                                                                                                                      • White milk leads on L/N/R sugar claims in 2016
                                                                                                                        • Advertising spend rises in 2016
                                                                                                                          • Arla remains the largest advertiser, with a strong focus on versatility
                                                                                                                          • Market Share

                                                                                                                            • Own-label retains dominant position in white milk
                                                                                                                              • Figure 21: UK retail sales of white milk*, by leading brands, 2015-16
                                                                                                                              • Figure 22: UK retail sales of white milk*, by leading brand-owners, 2015-16
                                                                                                                            • Alpro continues to gain from growth of the free-from market
                                                                                                                              • Further growth for Graham’s Dairy
                                                                                                                                • Own-label strengthens its position in cream
                                                                                                                                  • Figure 23: UK retail sales of cream, by leading brands, 2015-16
                                                                                                                                  • Figure 24: UK retail sales of cream, by leading brand-owners, 2015-16
                                                                                                                                • Leading flavoured milk brands fail to benefit from growth in the market
                                                                                                                                  • Figure 25: UK retail sales of flavoured milk, milk smoothies and milk flavourings, by leading brands, 2015/16-2016/17
                                                                                                                                  • Figure 26: UK retail sales of flavoured milk, milk smoothies and milk flavourings, by leading brand-owners, 2015/16-2016/17
                                                                                                                                • Range extensions boost own-label, while smaller brands gain distribution
                                                                                                                                  • Further strong growth for Starbucks milk drinks
                                                                                                                                  • Launch Activity and Innovation

                                                                                                                                    • Retailers and brands move forward on ethics
                                                                                                                                      • Operators take differing approaches to reassure consumers on supplier relations
                                                                                                                                        • Farmer organisations launch free range milks
                                                                                                                                          • White milk leads on L/N/R sugar claims in 2016
                                                                                                                                            • Flavoured milk brands take differing approaches to replacing sugar
                                                                                                                                              • Figure 27: New product launches in the UK milk, dairy drinks and cream market*, by top 20 claims (sorted by 2016), 2012-16
                                                                                                                                            • Organic brands look to make organic claim more tangible
                                                                                                                                              • Arla unveils Vitamin D Milk
                                                                                                                                                • Arla ups competition with other soft drinks with on-the-go Cravendale
                                                                                                                                                  • Goat’s milk brand targets school lunchbox occasion
                                                                                                                                                  • Advertising and Marketing Activity

                                                                                                                                                    • Total spending rises in 2016
                                                                                                                                                      • Figure 28: Total above-the line, online display and direct mail advertising expenditure on milk, dairy drinks and cream, 2013-16
                                                                                                                                                    • Arla continues to dominate advertising
                                                                                                                                                      • Cravendale promoted as a quality product, but also as fun and versatile
                                                                                                                                                        • On-the-go Cravendale promoted as helping people to get through their day
                                                                                                                                                          • Continued focus on B.O.B milk as offering both health benefits and taste
                                                                                                                                                            • B.O.B milk featured in breakfast campaign
                                                                                                                                                              • Organic milk advertising takes environmental focus
                                                                                                                                                                • Weetabix continues to focus on convenience of its breakfast drinks
                                                                                                                                                                  • Frijj returns to TV screens for first time in three years
                                                                                                                                                                    • Pushing associations with white milk
                                                                                                                                                                      • Pro-vegan advertising campaign attacks the dairy industry
                                                                                                                                                                        • Nielsen Ad Intel coverage
                                                                                                                                                                        • The Consumer – What You Need to Know

                                                                                                                                                                          • Cow’s milk needs to woo younger consumers
                                                                                                                                                                            • Flavoured milk usage rises
                                                                                                                                                                              • Health and food waste concerns restrict cream usage
                                                                                                                                                                                • Majority of users would pay more for milk than supermarkets charge
                                                                                                                                                                                  • References by glass could help to boost usage of milk as a source of calcium
                                                                                                                                                                                    • Guarantees of minimal antibiotics have wide appeal
                                                                                                                                                                                      • Milk price cuts risk a backlash, good supplier relations appeal
                                                                                                                                                                                        • Clearer sugar labelling for flavoured milk valued by many users
                                                                                                                                                                                          • Stronger emphasis on vitamins could enhance milk’s health image
                                                                                                                                                                                          • Usage of Milk

                                                                                                                                                                                            • Age bias in cow’s milk usage makes it necessary to woo younger consumers
                                                                                                                                                                                              • Figure 29: Usage of milk, by type, February 2017
                                                                                                                                                                                            • Usage of plant-based milks unchanged from last year
                                                                                                                                                                                              • Risk of backlash if plant-based milk’s eco-friendly credentials come into question
                                                                                                                                                                                                • Shift from whole to semi-skimmed milk has plateaued
                                                                                                                                                                                                  • Figure 30: Usage of milk and milk drinks, by variety, February 2017
                                                                                                                                                                                                • Flavoured milk usage rises
                                                                                                                                                                                                • Usage of Cream

                                                                                                                                                                                                  • Three in five people use cream
                                                                                                                                                                                                    • Smaller formats should help to address food waste concerns
                                                                                                                                                                                                      • Figure 31: Usage of cream, by type, February 2017
                                                                                                                                                                                                    • Recipe advice could boost usage of culinary creams
                                                                                                                                                                                                    • How Much Consumers are Prepared to Pay for Milk

                                                                                                                                                                                                      • Most users still willing to pay more than supermarkets charge for milk
                                                                                                                                                                                                          • Figure 32: How much milk users would pay for 4 pints (2.272 litres) of milk, February 2017
                                                                                                                                                                                                        • A quarter would pay £1.50 or more
                                                                                                                                                                                                          • Farmers’ pay guarantees are a promising means to appeal
                                                                                                                                                                                                          • Behaviours Relating to Milk, Dairy Drinks and Cream

                                                                                                                                                                                                            • Calcium’s importance is widely acknowledged
                                                                                                                                                                                                              • …but a third of users do not attempt to meet calcium recommendations
                                                                                                                                                                                                                • References by glass could help to boost usage of milk as a source of calcium
                                                                                                                                                                                                                  • Lower awareness of milk’s calcium among younger consumers suggests targeted marketing is needed
                                                                                                                                                                                                                    • Figure 33: Behaviours relating to milk, milk drinks and cream, February 2017
                                                                                                                                                                                                                  • Minimal antibiotics guarantees appeal to many
                                                                                                                                                                                                                    • Highlighting their credentials on antibiotics could boost organic producers
                                                                                                                                                                                                                      • Supermarkets could promote their antibiotic policies more widely
                                                                                                                                                                                                                      • Attitudes towards Milk, Dairy Drinks and Cream

                                                                                                                                                                                                                        • Risk of a backlash if supermarkets renew milk price wars
                                                                                                                                                                                                                          • Making good supplier relations tangible on-pack has wide scope to appeal
                                                                                                                                                                                                                            • Figure 34: Attitudes towards milk, dairy drinks and cream, February 2017
                                                                                                                                                                                                                          • Detailed sugar labelling on flavoured milk could boost help companies to be seen as proactive on health
                                                                                                                                                                                                                            • Flavoured milk using British milk could appeal to consumers’ desire to support local agriculture
                                                                                                                                                                                                                            • Qualities Associated with Selected Milks and Dairy Drinks

                                                                                                                                                                                                                              • Stronger on-pack emphasis on cow’s milk’s vitamin B12 content would better enable these to appeal to the health-conscious
                                                                                                                                                                                                                                • Few people are aware of plant-based milks’ calcium or vitamin content despite widespread fortification
                                                                                                                                                                                                                                  • Figure 35: Qualities associated with selected milks and dairy drinks, February 2017
                                                                                                                                                                                                                                • Scope for expansion in on-the-go formats
                                                                                                                                                                                                                                  • Flavoured milk does not benefit from white milk’s calcium associations
                                                                                                                                                                                                                                    • Sugar concerns could present a barrier to health-based marketing
                                                                                                                                                                                                                                      • Meal deals could help to reposition flavoured milk as a drink for adults
                                                                                                                                                                                                                                      • Appendix – Data Sources, Abbreviations and Supporting Information

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

                                                                                                                                                                                                                                                • Figure 36: Forecast of UK sales of milk, milk drinks and cream, by value, best- and worst-case, 2016-21
                                                                                                                                                                                                                                                • Figure 37: Forecast of UK sales of milk, milk drinks and cream, by volume, best- and worst-case, 2016-21
                                                                                                                                                                                                                                                • Figure 38: Forecast of UK sales of white milk, by value, best- and worst-case, 2016-21
                                                                                                                                                                                                                                                • Figure 39: Forecast of UK sales of white milk, by volume, best- and worst-case, 2016-21
                                                                                                                                                                                                                                                • Figure 40: Forecast of UK sales of cream, by value, best- and worst-case, 2016-21
                                                                                                                                                                                                                                                • Figure 41: Forecast of UK sales of cream, by volume, best- and worst-case, 2016-21
                                                                                                                                                                                                                                                • Figure 42: Forecast of UK sales of flavoured milk, by value, best- and worst-case, 2016-21
                                                                                                                                                                                                                                                • Figure 43: Forecast of UK sales of flavoured milk, by volume, best- and worst-case, 2016-21
                                                                                                                                                                                                                                                • Figure 44: UK retail volume sales of milk, milk drinks and cream, 2011-21
                                                                                                                                                                                                                                                • Figure 45: UK retail volume sales of white milk, 2011-21
                                                                                                                                                                                                                                                • Figure 46: UK retail volume sales of cream, 2011-21
                                                                                                                                                                                                                                                • Figure 47: UK retail volume sales of flavoured milk, 2011-21
                                                                                                                                                                                                                                              • Forecast methodology

                                                                                                                                                                                                                                              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 2017

                                                                                                                                                                                                                                              US $2,583.33 (Excl.Tax)