Friday 16 January 2009

Dairy Products Market 2008


Here’s a look at the Dairy Products market in 2008, courtesy of the Grocer. All data is for the 12 months to end October, and supplied by Nielsen market research.

It was a year when huge jumps in food prices collided with credit-crunched consumers reining in spending. Unsurprisingly there were changes in how people shopped for dairy products, but not perhaps as many as might be imagined.

Consumers bought roughly the same volume of products, despite dairy price inflation of 13.4%. There was some trading down to own label, notably in the butters and spreads sector, but by and large the big well advertised and promoted brands held on to their positions with the weaker ones struggling. There was a turning away from products sold as functional or fortified, with the exception of Danone Activia with its promise of a revved up digestive system. And Organic slipped back but is not yet in freefall.

Butters and Spreads
Total value sales were up by 17% to £1.1bn, with own label growing almost twice as fast, up 31%
Total volume sales were down by 1.1%, but own label grew by 4.3%.
A couple of grocery trade spokespeople commented that spreadable butters are growing fast because they combine convenience with a natural and healthy product. By contrast fortified spreads are losing sales because consumers are confused about why they should buy them, and they are more expensive.
Perhaps echoing the natural message, Lurpak butter is the number one brand for the second year running, beating Flora.
This is a sector where organic is struggling with Yeo Valley’s value sales up by only 6% in a market where inflation was 13%, meaning that volume sales must have been well down.

Cheese
Total value sales grew by 11.5% to £2.2bn. Own label grew slightly faster, up 11.8%
Its good to see that Cathedral City, is still the biggest brand in the market, owned by Dairy Crest, and British of course.

And a cheer for Wyke Farms which grew by 30% and is now the eighth biggest cheese brand. Here’s hoping that it is making money, and continues to show that it is possible to compete with multinational companies.

Yogurts
Total value sales were up by 7.7% to £1.9bn, and volumes grew by 1%. This is one category where own label is not growing as fast as branded products.
According to the Waitrose buyer consumers are flocking to Natural and Greek yogurts because they are seen as healthier.
Organic yogurt Rachel’s Dairy bucked the organic downturn and grew by 14%, but Yeo Valley clocked up a 1% growth.

Yogurt Drinks
This market is struggling. Value sales despite inflation were down 2.6%, and volume sales down by 8.3%.
The buyer for Booth’s supermarkets reckons that this is a market where consumers are cutting back because of price.

Fresh Milk (Additional data from DairyCo)
The total fresh milk market grew by 14.1% in value to £3.2bn, and 0.6% in volume. People are still purchasing as much fresh milk as they ever did.
Filtered milk, led by Cravendale continued to grow, up by 29%, but the modified milk market is fast disappearing, down by 35%, and is another example of consumers resisting a natural product which has been tampered with.
The Organic milk market was stable and Yeo Valley grew by 46%. There is anecdotal evidence that mothers like to buy organic milk for young children, even though it costs more than standard.
Wiseman’s “The One” milk did well growing by 48%.


NB

The one thing to bear in mind when looking at these numbers is that they are for the 12 months ending October 2008, about when recession truly started to bite. A look at data for the last quarter of 2008 may show some differences.

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