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Dairy Market - Is Functional Still a Driving Force? - Ireland - November 2010

The Irish dairy market has proved more robust than other food categories in the recession, growing by 4% in value sales over the last five years to reach an estimated €1.4 billion in 2010, despite the impact of heavy promotional activity and trading down over 2009 into 2010.

Health is both the biggest asset and liability for the Irish dairy industry, with low-fat and functional dairy products gaining market share, but negative press on saturated fats deterring some consumers.

While fluctuating global milk prices are an ongoing concern, the outlook for the Irish dairy market is broadly positive, with major investment in both generic marketing and company infrastructure boosting prospects, while the cheese and yogurt sub-categories are ripe for expansion.

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Table of contents

  1. Issues in the Market

      • Key themes in the report
        • Definition
          • Abbreviations
          • Future Opportunities

            • Cheese as the snack of choice
              • Putting the fun back into children’s dairy products
              • Market in Brief

                • Recession dampens value returns in RoI
                  • Yogurt market offers growth potential
                    • Health is the key driver across dairy
                      • Origin comes to the fore
                        • Investment set to bolster Irish dairy prospects
                          • Consumer opportunities
                          • Internal Market Environment

                            • Key points
                              • Research continues to back up dairy’s health benefits
                                  • Figure 1: Nutritional benefits of milk*, 2010
                                • Food agency urges consumers to opt for low-fat dairy products
                                  • Nutritional labelling highlights fat content
                                    • Recession and regulations hit functional dairy category
                                      • Figure 2: Summary of dairy claims eligible for approval under new EC health claims regulations, 2010
                                    • Dairy proves more resilient than other organic categories
                                        • Figure 3: Agreement with the statement ‘It’s worth paying more for organic food’, NI and RoI, 2004-09
                                      • Provenance plays a major role in Irish dairy market
                                        • Figure 4: Agreement with the statement ‘I buy goods produced by my own country whenever I can’, RoI and NI, 2004-09
                                      • Irish dairy industry tackles environmental concerns
                                        • Figure 5: Agreement with the statement ‘I would be prepared to pay more environmentally friendly products’, RoI and NI, 2004-09
                                      • Marketing support
                                        • National Dairy Council (NDC) of Ireland
                                          • Dairy Council of Northern Ireland
                                            • Milk in Action joint campaign
                                            • Broader Market Environment

                                              • Key points
                                                • Recession: A mixed bag for the dairy sector
                                                  • Figure 6: Economic outlook, RoI and NI, 2008-10
                                                • Irish dairy sector confidence improves
                                                  • Farmgate milk prices improve
                                                    • Price crisis of 2009 highlights impact of CAP reform
                                                      • Producers feel the squeeze as supermarkets move in
                                                        • Boost for school milk programmes
                                                            • Figure 7: Technical changes to the standards for school foods, UK, 2008
                                                          • An ageing population presents challenges for dairy industry
                                                            • Figure 8: Population demographics, by age, RoI, 2006-41
                                                            • Figure 9: Population demographics, by age, NI, 2008-58
                                                          • Elevating dairy products among teenagers
                                                            • Growth in middle and third age consumers supports functional category
                                                            • Competitive Context

                                                              • Key points
                                                                • Will marketing push reverse downward trend for milk?
                                                                  • Growth in allergies boosts sales of cows’ milk alternatives
                                                                    • Origin becomes a competitive battleground
                                                                    • Strengths and Weaknesses

                                                                      • Strengths
                                                                        • Weaknesses
                                                                        • Who’s Innovating?

                                                                          • Key points
                                                                            • Yogurt and hard cheese drive NPD
                                                                              • Figure 10: Number of new dairy launches, by sub-categories, IoI, 2010*
                                                                            • New products lead launch types
                                                                                • Figure 11: Number of new launches, by launch type, IoI, 2010*
                                                                              • Health-related claims dominate dairy NPD
                                                                                • Figure 12: Number of new launches, by top ten claims, IoI, 2007-09
                                                                              • Manufacturers invest in healthier lines
                                                                                • Organic activity holds strong
                                                                                  • Cows’ milk alternatives address growing allergy problem
                                                                                    • Functional straddles many health claim categories
                                                                                      • Kids’ yogurts are stripped of additives
                                                                                        • Flavoured milk sector targets older drinkers
                                                                                          • Provenance drives premium dairy category
                                                                                            • Convenience also a key claim
                                                                                            • Market Size and Forecast

                                                                                              • Key points
                                                                                                • Irish dairy market survives a turbulent 2009
                                                                                                  • Figure 13: Estimated retail sales of dairy products*, IoI, RoI and NI, 2005-15
                                                                                                • Retail value sales grow by 4% over 2005-10
                                                                                                  • Health, functionality and provenance offer market growth opportunities
                                                                                                  • Market Segmentation

                                                                                                    • Key points
                                                                                                      • Milk yields market share to yogurt
                                                                                                        • Figure 14: Segmentation of dairy market, RoI and NI, 2010
                                                                                                        • Figure 15: Market segmentation of dairy, RoI and NI, 2005-10
                                                                                                      • Milk
                                                                                                        • Milk market bottoms out in 2010
                                                                                                          • Figure 16: Estimated retail sales of milk, IoI, RoI and NI, 2005-15
                                                                                                        • Recession and cross-border shopping exert pressure
                                                                                                          • Low-fat and fortified milk driving growth
                                                                                                            • Downward trend continues in RoI as deflation counters volume sales
                                                                                                              • Growth slows – but continues – in the NI milk market
                                                                                                                • Cheese
                                                                                                                  • Figure 17: Estimated retail sales of cheese, IoI, RoI and NI, 2005-15
                                                                                                                • Cheese market remains buoyant despite branded promotions
                                                                                                                  • Competition and trading down hit RoI cheese market
                                                                                                                    • NI cheese market continues to climb
                                                                                                                      • Yogurt
                                                                                                                        • Figure 18: Estimated retail sales of yogurt, IoI, RoI and NI, 2005-15
                                                                                                                      • Yogurt market offers great scope for expansion
                                                                                                                        • Functional claims sweep yogurt – and the dairy market
                                                                                                                          • Functional brands lead RoI category
                                                                                                                            • NI yogurt category welcomes NPD
                                                                                                                              • Butter, spreads & margarine (BSM)
                                                                                                                                • Butter
                                                                                                                                  • Figure 19: Estimated retail sales of butter, IoI, RoI and NI, 2005-15
                                                                                                                                • Butter comforts credit crunch consumers
                                                                                                                                  • Spreads
                                                                                                                                    • Figure 20: Estimated retail sales of dairy spreads, IoI, RoI and NI, 2005-15
                                                                                                                                  • Discounting dampens sales of spreads
                                                                                                                                    • Margarine
                                                                                                                                      • Figure 21: Estimated retail sales of margarine, IoI, RoI and NI, 2005-15
                                                                                                                                    • Long-term decline continues for margarine
                                                                                                                                    • Companies and Products

                                                                                                                                      • Key points
                                                                                                                                        • Figure 22: Key companies and brands supplying the RoI and NI dairy markets, 2010
                                                                                                                                      • Arla Foods UK plc (Arla)
                                                                                                                                        • Corporate profile
                                                                                                                                          • Brands and products
                                                                                                                                            • Brand strategy
                                                                                                                                              • Brand NPD and marketing
                                                                                                                                                • Clandeboye Estate Yoghurt
                                                                                                                                                  • Corporate profile
                                                                                                                                                    • Brands and products
                                                                                                                                                      • Brand strategy
                                                                                                                                                        • Brand NPD and marketing
                                                                                                                                                          • Dale Farm Ltd
                                                                                                                                                            • Corporate profile
                                                                                                                                                              • Brands and products
                                                                                                                                                                • Brand strategy
                                                                                                                                                                  • Brand NPD and marketing
                                                                                                                                                                    • Dairygold Food Ingredients
                                                                                                                                                                      • Corporate profile
                                                                                                                                                                        • Brands and products
                                                                                                                                                                          • Brand strategy
                                                                                                                                                                            • Brand NPD and marketing
                                                                                                                                                                              • Danone UK Ltd
                                                                                                                                                                                • Corporate profile
                                                                                                                                                                                  • Brands and products
                                                                                                                                                                                    • Brand strategy
                                                                                                                                                                                      • Brand NPD and marketing
                                                                                                                                                                                        • Donegal Creameries plc
                                                                                                                                                                                          • Corporate profile
                                                                                                                                                                                            • Brands and products
                                                                                                                                                                                              • Brand strategy
                                                                                                                                                                                                • Brand NPD and marketing
                                                                                                                                                                                                  • Fivemiletown Creamery
                                                                                                                                                                                                    • Corporate profile
                                                                                                                                                                                                      • Brands and products
                                                                                                                                                                                                        • Brand strategy
                                                                                                                                                                                                          • Brand NPD and marketing
                                                                                                                                                                                                            • Glanbia plc
                                                                                                                                                                                                              • Corporate profile
                                                                                                                                                                                                                • Brands and products
                                                                                                                                                                                                                  • Brand strategy
                                                                                                                                                                                                                    • Brand NPD and marketing
                                                                                                                                                                                                                      • Kerry Group plc
                                                                                                                                                                                                                        • Corporate profile
                                                                                                                                                                                                                          • Brands and products
                                                                                                                                                                                                                            • Brand strategy
                                                                                                                                                                                                                              • Brand NPD and marketing
                                                                                                                                                                                                                                • Kraft Foods
                                                                                                                                                                                                                                  • Corporate profile
                                                                                                                                                                                                                                    • Brands and products
                                                                                                                                                                                                                                      • Brand strategy
                                                                                                                                                                                                                                        • Brand NPD and marketing
                                                                                                                                                                                                                                          • St Helen’s Farm
                                                                                                                                                                                                                                            • Corporate profile
                                                                                                                                                                                                                                              • Brands and products
                                                                                                                                                                                                                                                • Brand strategy
                                                                                                                                                                                                                                                  • Brand NPD and marketing
                                                                                                                                                                                                                                                    • Unilever
                                                                                                                                                                                                                                                      • Corporate profile
                                                                                                                                                                                                                                                        • Brands and products
                                                                                                                                                                                                                                                          • Brand strategy
                                                                                                                                                                                                                                                            • Brand NPD and marketing
                                                                                                                                                                                                                                                            • The Consumer – Consumption

                                                                                                                                                                                                                                                              • Key points
                                                                                                                                                                                                                                                                • Cheese in blocks
                                                                                                                                                                                                                                                                  • Block cheese has lowest penetration in one-person households
                                                                                                                                                                                                                                                                    • Figure 23: Penetration of cheese in blocks, RoI and NI, 2004-09
                                                                                                                                                                                                                                                                  • Health-conscious consumers cut back on frequency of consumption
                                                                                                                                                                                                                                                                    • Figure 24: Frequency of consumption of cheese in blocks, RoI and NI, 2004-09
                                                                                                                                                                                                                                                                  • Cheddar dominates, with greater origin loyalty in RoI
                                                                                                                                                                                                                                                                    • Figure 25: Types of cheese consumed (cheese in blocks), RoI and NI, 2004-09
                                                                                                                                                                                                                                                                  • Favoured cheese types: More English cheddar for NI and Brie for RoI
                                                                                                                                                                                                                                                                    • Figure 26: Types of cheese eaten most often (cheese in blocks), RoI and NI, 2004-09
                                                                                                                                                                                                                                                                  • Packeted, spread and speciality cheeses
                                                                                                                                                                                                                                                                    • Mothers eat more non-block cheese
                                                                                                                                                                                                                                                                      • Figure 27: Penetration of packeted, spread and speciality cheeses, RoI and NI, 2004-09
                                                                                                                                                                                                                                                                    • RoI consumers trade down to light usage
                                                                                                                                                                                                                                                                      • Figure 28: Frequency of consumption of packeted, spread and speciality cheeses, RoI and NI, 2004-09
                                                                                                                                                                                                                                                                    • Greatest growth for grated cheese
                                                                                                                                                                                                                                                                      • Figure 29: Penetration of varieties of packeted, spread and speciality cheeses, RoI and NI, 2004-09
                                                                                                                                                                                                                                                                    • Butter
                                                                                                                                                                                                                                                                      • Solid growth for butter
                                                                                                                                                                                                                                                                        • Figure 30: Penetration of butter, RoI and NI, 2004-09
                                                                                                                                                                                                                                                                      • Lower frequency of butter usage for health-conscious professionals
                                                                                                                                                                                                                                                                        • Figure 31: Frequency of consumption of butter, RoI and NI, 2004-09
                                                                                                                                                                                                                                                                      • Soft margarine
                                                                                                                                                                                                                                                                        • Higher penetration in NI for soft margarine
                                                                                                                                                                                                                                                                          • Figure 32: Penetration of soft margarine, RoI and NI, 2004-09
                                                                                                                                                                                                                                                                        • Usage of soft margarine shifts towards ‘light’
                                                                                                                                                                                                                                                                          • Figure 33: Frequency of consumption of soft margarine, RoI and NI, 2004-09
                                                                                                                                                                                                                                                                        • Low-fat spreads and dairy spreads
                                                                                                                                                                                                                                                                          • Weight-conscious married women favour spreads
                                                                                                                                                                                                                                                                            • Figure 34: Penetration of low-fat spreads and dairy spreads, RoI and NI, 2004-09
                                                                                                                                                                                                                                                                          • Younger consumers are light users of spreads
                                                                                                                                                                                                                                                                            • Figure 35: Frequency of consumption of low-fat spreads and dairy spreads, RoI and NI, 2004-09
                                                                                                                                                                                                                                                                          • Yogurt and fromage frais
                                                                                                                                                                                                                                                                            • Female and affluent consumers lead yogurt consumption
                                                                                                                                                                                                                                                                              • Figure 36: Penetration of yogurt and fromage frais, RoI and NI, 2004-09
                                                                                                                                                                                                                                                                            • An opportunity to increase frequency of usage?
                                                                                                                                                                                                                                                                              • Figure 37: Frequency of consumption of yogurt and fromage frais, RoI and NI, 2004-08
                                                                                                                                                                                                                                                                              • Figure 38: Frequency of consumption of yogurt and fromage frais*, RoI and NI, 2009
                                                                                                                                                                                                                                                                          • The Consumer – Attitudes towards Dairy

                                                                                                                                                                                                                                                                            • Key points
                                                                                                                                                                                                                                                                              • Greater focus on health and cost apparent in RoI
                                                                                                                                                                                                                                                                                • Figure 39: Agreement with statements relating to dairy products, NI and RoI, August 2010
                                                                                                                                                                                                                                                                              • Older NI men and affluent RoI residents cut back on dairy
                                                                                                                                                                                                                                                                                • Affluent women favour probiotic yogurts
                                                                                                                                                                                                                                                                                  • NI seeks promotions, RoI trades down
                                                                                                                                                                                                                                                                                    • Branded and premium dairy lines appeal to men
                                                                                                                                                                                                                                                                                    • Consumer Target Groups

                                                                                                                                                                                                                                                                                      • Key points
                                                                                                                                                                                                                                                                                        • RoI target groups
                                                                                                                                                                                                                                                                                          • Figure 40: Consumer target groups, RoI, August 2010
                                                                                                                                                                                                                                                                                        • Recession-affected Purchasers
                                                                                                                                                                                                                                                                                          • Characteristics
                                                                                                                                                                                                                                                                                            • Who are Recession-affected Purchasers?
                                                                                                                                                                                                                                                                                              • Targeting Recession-affected Purchasers
                                                                                                                                                                                                                                                                                                • Cut-back Kids
                                                                                                                                                                                                                                                                                                  • Characteristics
                                                                                                                                                                                                                                                                                                    • Who are Cut-back Kids?
                                                                                                                                                                                                                                                                                                      • Targeting Cut-back Kids
                                                                                                                                                                                                                                                                                                        • Dairy Queens
                                                                                                                                                                                                                                                                                                          • Characteristics
                                                                                                                                                                                                                                                                                                            • Who are Dairy Queens?
                                                                                                                                                                                                                                                                                                              • Targeting the Dairy Queens
                                                                                                                                                                                                                                                                                                                • NI target groups
                                                                                                                                                                                                                                                                                                                  • Figure 41: Consumer target groups, NI, August 2010
                                                                                                                                                                                                                                                                                                                • Health-conscious
                                                                                                                                                                                                                                                                                                                  • Characteristics
                                                                                                                                                                                                                                                                                                                    • Who are the Health-conscious?
                                                                                                                                                                                                                                                                                                                      • Targeting the Health-conscious
                                                                                                                                                                                                                                                                                                                        • Dairy Deal-seekers
                                                                                                                                                                                                                                                                                                                          • Characteristics
                                                                                                                                                                                                                                                                                                                            • Who are the Dairy Deal-seekers?
                                                                                                                                                                                                                                                                                                                              • Targeting the Dairy Deal-seekers
                                                                                                                                                                                                                                                                                                                                • Brand-loyal
                                                                                                                                                                                                                                                                                                                                  • Characteristics
                                                                                                                                                                                                                                                                                                                                    • Who are the Brand-loyal?
                                                                                                                                                                                                                                                                                                                                      • Targeting the Brand-loyal
                                                                                                                                                                                                                                                                                                                                      • Appendix – The Consumer – Attitudes

                                                                                                                                                                                                                                                                                                                                          • Figure 42: Agreement with statements relating to dairy products, by demographic breakdown, NI, August 2010
                                                                                                                                                                                                                                                                                                                                          • Figure 43: Agreement with statements relating to dairy products, by demographic breakdown, NI, August 2010
                                                                                                                                                                                                                                                                                                                                          • Figure 44: Agreement with statements relating to dairy products, by demographic breakdown, RoI, August 2010
                                                                                                                                                                                                                                                                                                                                          • Figure 45: Agreement with statements relating to dairy products, by demographic breakdown, RoI, August 2010
                                                                                                                                                                                                                                                                                                                                      • Appendix – The Consumer – Target Groups

                                                                                                                                                                                                                                                                                                                                          • Figure 46: Agreement with statements relating to dairy products, by consumer target group, RoI, August 2010
                                                                                                                                                                                                                                                                                                                                          • Figure 47: Agreement with statements relating to dairy products, by consumer target group, NI, August 2010
                                                                                                                                                                                                                                                                                                                                          • Figure 48: Consumer target groups, by demographic breakdown, RoI, August 2010
                                                                                                                                                                                                                                                                                                                                          • Figure 49: Consumer target groups, by demographic breakdown, NI, August 2010

                                                                                                                                                                                                                                                                                                                                      Companies Covered

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                                                                                                                                                                                                                                                                                                                                      Dairy Market - Is Functional Still a Driving Force? - Ireland - November 2010

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