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Dairy Drinks, Milk and Cream - UK - May 2012

“Strong endorsement of regional products, particularly among higher-earning households, suggests this is a powerful way to engage with users and build loyalty based on provenance rather than price.”

– Kiti Soininen, Head of UK Food, Drink & Foodservice Research

Some questions answered in this report include:

  • How can brands convert the emotional support for British farmers’ livelihoods into higher premiums for the industry?
  • How can leveraging the local provenance angle encourage loyalty within the white milk market?
  • How can milk compete more effectively with other cold drinks?
  • How can flavoured milk expand beyond its current limitations?

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Table of contents

  1. Introduction

      • Definition
        • Abbreviations
        • Executive Summary

            • The market
              • Figure 1: Forecast of UK retail sales of dairy drinks, milk and cream, by value, 2006-16
            • All types of white milk show a decline
              • Home cooks willing to pay more for cream
                • Flavoured milk shows enviable growth
                  • Forecast
                    • Market factors
                      • Milk loses out to other dairy products
                        • Price discounting has repercussions on the supply chain
                          • Figure 2: Overview of challenges facing the UK milk supply chain, 2012
                        • Companies, brands and innovation
                          • Mature liquid milk market is fiercely competitive
                            • Figure 3: Estimated brand shares in the liquid white milk market, by value, 2011 (est)
                          • FRijj’s Incredible range shakes up the traditional trio of flavours
                            • Figure 4: Estimated brand shares in the flavoured milk market, by value, 2011 (est)
                          • Social media helps attract young adults
                            • Packaging changes reinvigorate the fixture
                              • The consumer
                                • Milk consumption relies on families’ heavy usage
                                  • Figure 5: Usage of milk in last 12 months in the household, Volume Importance Index, selected groups, 2011
                                • Semi-skimmed retains its market dominance
                                  • Figure 6: Milk usage, by type, in the last three months, March 2012
                                • Communicating versatility brings new opportunities for cream
                                  • Figure 7: Cream usage, by type, in the last three months, March 2012
                                • Healthier milks show potential, but the taste is off-putting to some
                                  • Figure 8: Attitudes towards milk, March 2012
                                • Reluctance to pay more for milk
                                  • Figure 9: Attitudes towards milk, March 2012
                                • Regional milks have pulling power
                                  • Figure 10: Attitudes towards added value in milk/cream, March 2012
                                • Indifference shown towards packaging innovation
                                  • Figure 11: Attitudes towards milk/cream packaging, March 2012
                                • What we think
                                • Issues in the Market

                                    • How can brands convert the emotional support for British farmers’ livelihoods into higher premiums for the industry?
                                      • How can leveraging the local provenance angle encourage loyalty within the white milk market?
                                        • How can milk compete more effectively with other cold drinks?
                                          • How can flavoured milk expand beyond its current limitations?
                                          • Future Opportunities

                                              • Trend: Without a Care
                                                • Trend: Edutainment
                                                • Internal Market Environment

                                                  • Key Points
                                                    • The milk challenge
                                                      • Figure 12: Percentage change in average consumption per person per week of dairy products, 2000-2010 and 2009-10
                                                    • Positioning milk at the forefront of the health debate
                                                      • Figure 13: Consumer health targets, in response to the question “Thinking about your health, which of the following, if any have you tried to do in the last 12 months?”, June 2011
                                                    • Organic milk losing out to conventional milk
                                                      • Increasing milk’s chances in the soft drink ring
                                                        • Price sensitivity limits prospects of adding value to milk
                                                          • Figure 14: Agreement with selected lifestyle statements related to cost, 2007-11
                                                        • Further steps along the Roadmap towards a sustainable future for the dairy industry
                                                        • Broader Market Environment

                                                          • Key Points
                                                            • The ‘four pint’ benchmark
                                                              • Figure 15: Overview of challenges facing the UK milk supply chain, 2012
                                                            • Aggressive pricing hits processors’ pockets
                                                              • Figure 16: Number of dairy producers in the UK (000s), 2002-10
                                                              • Figure 17: Monthly milk prices, UK, 2007-11
                                                            • Squeeze on consumer spending continues
                                                              • Figure 18: Monthly consumer confidence index, January 2007-December 2011
                                                            • Heavy reliance on families as core milk and cream consumers
                                                              • Nurturing the ‘grey pound’
                                                                • Figure 19: Forecast adult population trends, by lifestage, 2006-16
                                                                • Figure 20: Forecast adult population trends, by age group, 2011-16
                                                                • Figure 21: Complaints suffered from in the last 12 months, by age, 2011
                                                                • Figure 22: Usage of milk in last 12 months in the household, by household size, 2011
                                                            • Competitive Context

                                                              • Key Points
                                                                • Competing for the breakfast occasion
                                                                  • Figure 23: UK retail value sales of yogurt and breakfast cereal markets, at current prices, 2007-11
                                                                • Fizzy drinks dominate the crowded soft drinks market
                                                                  • Figure 24: UK retail value sales of selected markets competing with milk, at current prices, 2007-11
                                                              • Strengths and Weaknesses

                                                                • Strengths
                                                                  • Weaknesses
                                                                  • Who’s Innovating?

                                                                    • Key Points
                                                                      • High levels of NPD activity
                                                                        • Figure 25: Share of new launches of dairy drinks, milk and cream of NPD in dairy and in the total UK food market, 2008-11
                                                                        • Figure 26: Product launches within the UK dairy drinks, milk & cream market, by sub-category, 2008-11
                                                                      • Own-label domination
                                                                        • Figure 27: Product launches within the UK dairy drinks, milk & cream market, by own-label vs branded split, 2008-11
                                                                        • Figure 28: Product launches within the UK dairy drinks, milk & cream market, by sub-category and own-label, 2011
                                                                      • FRijj shakes up flavoured milk with new flavour combos
                                                                        • Figure 29: Top ten flavour components in flavoured milk launches, 2008-11
                                                                      • Encouraging milk consumption among children
                                                                        • Cream targets both ends of the indulgence spectrum
                                                                            • Figure 30: Top ten flavour components in cream launches, 2008-11
                                                                          • Environmentally-friendly packaging is increasingly common
                                                                            • Figure 31: Top ten claims of new product launches within the UK dairy drinks, milk & cream market, 2008-11
                                                                          • Tinted milk bottle lids increase recycling opportunities
                                                                            • New designs by Dairy Crest create a new lightweight milk bottle
                                                                              • Plus and minus claims add value to milk
                                                                              • Market Size and Forecast

                                                                                • Key Points
                                                                                  • Market trends in dairy drinks, milk and cream
                                                                                    • Figure 32: UK retail* sales of dairy drinks, milk and cream, 2006-16
                                                                                  • Competitive white milk prices fail to stimulate sales
                                                                                    • Figure 33: UK retail* sales of white milk, by value and volume, 2006-16
                                                                                  • Cream value sales flourish at the expense of volume sales
                                                                                    • Figure 34: UK retail sales of cream, by value and volume, 2006-16
                                                                                  • Flavoured milk represents a lucrative niche for processors
                                                                                    • Figure 35: UK retail sales of flavoured milk, by value and volume, 2006-16
                                                                                  • Forecast
                                                                                    • Milk, flavoured milk and cream market to reach £5.4 billion
                                                                                        • Figure 36: Forecast of UK retail sales of dairy drinks, milk and cream, by value, 2006-16
                                                                                      • Value growth of 12% forecast for white milk by 2016
                                                                                        • Figure 37: Forecast of UK retail sales of white milk, by volume, 2006-16
                                                                                        • Figure 38: Forecast of UK retail sales of white milk, by value, 2006-16
                                                                                      • Value sales of cream forecast to grow by 11% by 2016
                                                                                          • Figure 39: Forecast of UK retail sales of cream, by value, 2006-16
                                                                                        • Flavoured milk growth expected to continue
                                                                                            • Figure 40: Forecast of UK retail sales of flavoured milk, by value, 2006-16
                                                                                          • Forecast methodology
                                                                                          • Segment Performance

                                                                                            • Key Points
                                                                                              • Semi-skimmed leads the decline
                                                                                                • Figure 41: Retail sales of fresh and long-life white milk, by type, value and volume, 2009-11
                                                                                              • Lactose-free is only fresh milk sector to grow in 2011
                                                                                                  • Figure 42: Retail sales of fresh white milk, by type, by value, 2009-11
                                                                                                  • Figure 43: Retail sales of fresh white milk, by type, by volume, 2009-11
                                                                                                • Cream continues to benefit from eating-in trends and higher prices
                                                                                                  • Figure 44: UK retail sales of cream, by type, by value, 2009-11
                                                                                                  • Figure 45: UK retail sales of cream, by type, by volume, 2009-11
                                                                                              • Market Share

                                                                                                • Key Points
                                                                                                  • Liquid milk – few winners emerge in the ongoing price war
                                                                                                    • Figure 46: Estimated manufacturer shares of own-label liquid milk sales, by volume, 2011
                                                                                                    • Figure 47: Estimated brand shares in the liquid white milk market, by value, 2010-11
                                                                                                  • FRijj holds its lead
                                                                                                    • Figure 48: Estimated brand shares in the flavoured milk market, by value, 2010-11
                                                                                                • Companies and Products

                                                                                                  • Alpro
                                                                                                    • Arla Foods
                                                                                                      • Dairy Crest
                                                                                                        • FrieslandCampina
                                                                                                          • Nestlé
                                                                                                            • Robert Wiseman Dairies
                                                                                                              • St. Helen’s Farm
                                                                                                                • Guernsey Dairy
                                                                                                                • Brand Communication and Promotion

                                                                                                                  • Key Points
                                                                                                                    • Major players stagger above-the-line investment
                                                                                                                      • Figure 49: Main monitored media advertising spend on dairy drinks, milk and cream, 2007-11
                                                                                                                    • Arla Foods’ contribution accounts for £6 in every £10 of above the line spend
                                                                                                                      • Figure 50: Main monitored media advertising spend on dairy drinks, milk & cream, by advertiser, 2007-11
                                                                                                                    • ‘The milk matters’ to Cravendale families
                                                                                                                      • Alpro invites young women to feed their curiosity
                                                                                                                        • FRijj targets its 25-34-year-old male base with social media
                                                                                                                          • Yazoo redirects its marketing towards young men in 2012
                                                                                                                            • Milk Marketing Forum cashes in on Mad Men success
                                                                                                                              • Robert Wiseman creates a charity tie-up with Wallace & Gromit at breakfast time
                                                                                                                                • Figure 51: Main monitored media advertising spend on dairy drinks, milk & cream, by brand, 2007-11
                                                                                                                              • Cinema, radio and online media become more relevant in 2011
                                                                                                                                • Figure 52: Main monitored media advertising spend on dairy drinks, milk and cream, by media type, 2007-11
                                                                                                                            • Consumer – Trends in Milk Usage

                                                                                                                              • Key Points
                                                                                                                                • Increasing frequency of use is milk’s main challenge
                                                                                                                                  • Figure 53: Usage of milk in last 12 months in the household, 2009-11
                                                                                                                                  • Figure 54: Usage of milk, breakfast cereals, tea and coffee in the last 12 months, 2010-11
                                                                                                                                • Usage reveals an over-reliance on families
                                                                                                                                    • Figure 55: Usage of milk in last 12 months in the household, Volume Importance Index, selected groups, 2011
                                                                                                                                  • Fresh pasteurised milk sees off pretenders
                                                                                                                                      • Figure 56: Types of milk used most often in the last 12 months in the household, 2008-11
                                                                                                                                  • Consumer – Usage of Milk and Cream by Type and Occasion

                                                                                                                                    • Key Points
                                                                                                                                      • Milk and cream preferences
                                                                                                                                          • Figure 57: Milk usage, by type, in the last three months, March 2012
                                                                                                                                        • Semi-skimmed is the favourite but full-fat milk holds its ground
                                                                                                                                          • Milk and dairy alternatives invite a broader audience
                                                                                                                                            • Too soon for 1% fat milk sales to lose momentum as it caters for current trends
                                                                                                                                              • Filtered milk attracts high-income households
                                                                                                                                                • Flavoured milk – loved by kids and adults
                                                                                                                                                  • Breakfast and hot drinks are the main occasions for milk
                                                                                                                                                    • Figure 58: Milk usage, by occasion, in the last three months, March 2012
                                                                                                                                                    • Figure 59: Milk usage, by occasion, by age group, in the last three months, March 2012
                                                                                                                                                  • Cream preferences
                                                                                                                                                    • Figure 60: Cream usage, by type, in the last three months, March 2012
                                                                                                                                                  • Cream maintains its ‘sweet’ associations
                                                                                                                                                    • Figure 61: Cream usage, by occasion, in the last three months, March 2012
                                                                                                                                                  • Milk and cream repertoires
                                                                                                                                                    • Figure 62: Repertoire of milk and cream usage, by type, in the last three months, March 2012
                                                                                                                                                    • Figure 63: Repertoire of milk usage, by type, by age and presence of children in the household, in the last three months, March 2012
                                                                                                                                                • Consumer – Attitudes Towards Milk

                                                                                                                                                  • Key Points
                                                                                                                                                    • Few consumers dispute milk’s health credentials
                                                                                                                                                      • Figure 64: Attitudes towards healthiness of milk, March 2012
                                                                                                                                                      • Figure 65: Agreement with the statement “I am wary of the taste of healthier milk”, by type of milk used in the last three months, March 2012
                                                                                                                                                    • Flavoured milk enjoys a boost from milk’s healthy halo effect
                                                                                                                                                      • Tough opposition to paying more for milk
                                                                                                                                                        • Figure 66: Attitudes towards milk, March 2012
                                                                                                                                                        • Figure 67: Agreement with the statement “It’s worth paying more for branded milk”, by type of milk used in the last three months, March 2012
                                                                                                                                                    • Consumer – Attitudes Towards Added Value in Milk

                                                                                                                                                      • Key Points
                                                                                                                                                        • High level of demand for locally-sourced milk and cream
                                                                                                                                                          • Figure 68: Attitudes towards added value in milk/cream, March 2012
                                                                                                                                                        • Two in five motivated by added health benefits
                                                                                                                                                          • Packaging struggles to incite excitement
                                                                                                                                                            • Figure 69: Attitudes towards milk/cream packaging, March 2012
                                                                                                                                                        • Milk and Cream Target Groups

                                                                                                                                                          • Key Points
                                                                                                                                                            • Four target groups
                                                                                                                                                              • Figure 70: Target groups for milk and cream, March 2012
                                                                                                                                                            • Selective Shoppers (43%)
                                                                                                                                                              • Farmers’ Friends (22%)
                                                                                                                                                                • Low-Fat Fans (17%)
                                                                                                                                                                  • Natural Goodness (18%)
                                                                                                                                                                  • Appendix – Broader Market Environment

                                                                                                                                                                      • Figure 71: Forecast adult population trends, by socio-economic group, 2006-16
                                                                                                                                                                  • Appendix – Competitive Context

                                                                                                                                                                      • Figure 72: Consumption of breakfast cereals, 2009-11
                                                                                                                                                                      • Figure 73: Consumption of bread, 2009-11
                                                                                                                                                                  • Appendix – Who’s Innovating?

                                                                                                                                                                      • Figure 74: Product launches within the UK dairy drinks, milk & cream market, by brand, 2008-11
                                                                                                                                                                      • Figure 75: Product launches within the UK flavoured milk market, branded vs own-label, 2008-11
                                                                                                                                                                  • Appendix – Market Size and Forecast

                                                                                                                                                                      • Figure 76: Forecast of UK retail sales of dairy drinks, milk and cream, by volume, 2006-16
                                                                                                                                                                      • Figure 77: Forecast of UK retail sales of dairy drinks, milk and cream, best and worst case forecast, by volume, litres, 2011-16
                                                                                                                                                                      • Figure 78: Forecast of UK retail sales of dairy drinks, milk and cream, best and worst case forecast, by value, 2011-16
                                                                                                                                                                    • White milk
                                                                                                                                                                      • Figure 79: Forecast of UK retail sales of white milk, best and worst case forecast, by volume, litres, 2011-16
                                                                                                                                                                      • Figure 80: Forecast of UK retail sales of white milk, best and worst case forecast, by value, 2011-16
                                                                                                                                                                    • Cream
                                                                                                                                                                      • Figure 81: Forecast of UK retail sales of cream, by volume, litres, 2006-16
                                                                                                                                                                      • Figure 82: Forecast of UK retail sales of cream, best and worst case forecast, by volume, litres, 2011-16
                                                                                                                                                                      • Figure 83: Forecast of UK retail sales of cream, best and worst case forecast, by value, 2011-16
                                                                                                                                                                    • Flavoured milk
                                                                                                                                                                      • Figure 84: Forecast of UK retail sales of flavoured milk, by volume, litres, 2006-16
                                                                                                                                                                      • Figure 85: Forecast of UK retail sales of flavoured milk, best and worst case forecast, by volume, litres, 2011-16
                                                                                                                                                                      • Figure 86: Forecast of UK retail sales of flavoured milk, best and worst case forecast, by value, 2011-16
                                                                                                                                                                  • Appendix – Brand Communication and Promotion

                                                                                                                                                                      • Figure 87: Main monitored media advertising spend on dairy drinks, milk and cream, 2007-11
                                                                                                                                                                  • Appendix – Consumer – Trends in Milk Usage

                                                                                                                                                                      • Figure 88: Varieties of milk used most often in the last 12 months in the household, 2008-11
                                                                                                                                                                      • Figure 89: Usage of milk in last 12 months in the household, by demographics, 2011
                                                                                                                                                                  • Appendix – Usage of Milk and Cream by Type and Occasion

                                                                                                                                                                      • Figure 90: Milk usage, by type, March 2012
                                                                                                                                                                      • Figure 91: Most popular types of milk used, by all users, by demographics, March 2012
                                                                                                                                                                      • Figure 92: Next most popular types of milk used, by all users, by demographics, March 2012
                                                                                                                                                                      • Figure 93: Other types of milk used, by all users, by demographics, March 2012
                                                                                                                                                                      • Figure 94: Most popular types of milk used personally, by demographics, March 2012
                                                                                                                                                                      • Figure 95: Next most popular types of milk used personally, by demographics, March 2012
                                                                                                                                                                      • Figure 96: Other types of milk used personally, by demographics, March 2012
                                                                                                                                                                      • Figure 97: Repertoire of milk usage, by type of milk, by demographics, March 2012
                                                                                                                                                                      • Figure 98: Most popular types of cream used, by demographics, March 2012
                                                                                                                                                                      • Figure 99: Next most popular types of cream used, by demographics, March 2012
                                                                                                                                                                      • Figure 100: Repertoire of cream usage, by type of cream, by demographics, March 2012
                                                                                                                                                                      • Figure 101: Milk usage, by occasion, by demographics, March 2012
                                                                                                                                                                      • Figure 102: Repertoire of milk usage, by occasion, by demographics, March 2012
                                                                                                                                                                      • Figure 103: Cream usage, by occasion, by demographics, March 2012
                                                                                                                                                                  • Appendix – Consumer Attitudes Towards Milk

                                                                                                                                                                      • Figure 104: Attitudes towards milk, March 2012
                                                                                                                                                                      • Figure 105: Agreement with the statements ‘I am wary of the taste of healthier milk’ and ‘It is worth paying more for milk that stays fresher for longer’, by demographics, March 2012
                                                                                                                                                                      • Figure 106: Agreement with the statements ‘Milk has a range of health benefits’ and ‘Milk is a good source of nutrients’, by demographics, March 2012
                                                                                                                                                                      • Figure 107: Agreement with the statements ‘‘Flavoured milk is a good way to get the kids to drink milk’ and ‘Flavoured milk is less healthy than unflavoured milk’, by demographics, March 2012
                                                                                                                                                                      • Figure 108: Agreement with the statements ‘The price of milk affects where I do my grocery shopping’ and ‘I prefer to get my calcium intake from other sources’, by demographics, March 2012
                                                                                                                                                                      • Figure 109: Agreement with the statements ‘It is worth paying more for branded milk’ and ‘I would be willing to pay more for milk from specific geographical areas’, by demographics, March 2012
                                                                                                                                                                      • Figure 110: Agreement with the statement ‘It is worth paying more for organic milk’, by demographics, March 2012
                                                                                                                                                                  • Appendix – Attitudes Towards Added Value in Milk

                                                                                                                                                                      • Figure 111: Attitudes towards added value in milk/cream, March 2012
                                                                                                                                                                      • Figure 112: Agreement with the statements ‘I would like to see a wider variety of pack sizes available’ and ‘I would be willing to pay more for milk/cream that guarantees higher animal welfare’, by demographics, March 2012
                                                                                                                                                                      • Figure 113: Agreement with the statements ‘I would like to know more about where my milk/cream comes from’ and ‘I like to try new packaging formats eg milk bags’, by demographics, March 2012
                                                                                                                                                                      • Figure 114: Agreement with the statements ‘I would only try new formats if they were on promotion’ and ‘I would like to see more locally sourced milk/cream at my supermarket’, by demographics, March 2012
                                                                                                                                                                      • Figure 115: Agreement with the statements ‘I would like to see more milk/cream products with added benefits’ and ‘I would be willing to pay more for milk/cream if the extra money went to the farmers’, by demographics, March 2012
                                                                                                                                                                      • Figure 116: Agreement with the statement ‘I would like to see more healthier milk/cream products’, by demographics, March 2012
                                                                                                                                                                  • Appendix – Target Groups

                                                                                                                                                                      • Figure 117: Attitudes towards added value in milk/cream, by target groups, March 2012
                                                                                                                                                                      • Figure 118: Milk usage, by type, by target groups, March 2012
                                                                                                                                                                      • Figure 119: Cream usage, by type, by target groups, March 2012
                                                                                                                                                                      • Figure 120: Milk usage, by occasion, by target groups, March 2012
                                                                                                                                                                      • Figure 121: Cream usage, by occasion, by target groups, March 2012
                                                                                                                                                                      • Figure 122: Attitudes towards milk, by target groups, March 2012
                                                                                                                                                                      • Figure 123: Attitude towards healthy lifestyles, by target groups, March 2012
                                                                                                                                                                      • Figure 124: Target groups, by demographics, March 2012

                                                                                                                                                                  Dairy Drinks, Milk and Cream - UK - May 2012

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