Whether its Gordon Brown telling us not to waste food, a general belt tightening in an effort to pay the bills, or more questioning of the value of what we buy, there is a definite change in consumer buying habits.
A well publicised example of the shift to thrift comes in the shape of Tesco's decision to reduce the price of many organic lines. Their press release quotes TNS saying that demand for organic produce across all retailers has dropped by 8.1% in the last three months. Tesco says that many people would like to buy organic but won't pay the premium. So it has cut the price of new potatoes and carrots by 20%, broccoli and asparagus by 25%,avocados by 13%, mixed peppers by 12%, leeks by 11% and courgettes by 5%.
Next, red meat. In the 12 weeks to June 15th, according to TNS figures published by the British Pig Executive, volume sales of beef, lamb and pork dropped by 4.7% in volume compared with last year. What seems to be happening is that fewer people are buying red meat on a regular basis, and those that do buy are buying smaller amounts. Worst hit is lamb, down 12%, followed by beef down 4% and pork down 1%. Lamb of course is the most expensive red meat, and pork the cheapest on a per kilo basis. Sausages are the only red meat product showing any growth, and then by only 1%. The shift to thrift is clear in the type of cuts bought, with a marked trend to minced and stewing beef and lamb, pork belly, and pork shoulder. On the other hand, sales of roasting joints are well down, and even convenient cuts like chops and steaks are selling less than last year.
The shift is happening in even the smartest places. Waitrose have reported a 55% increase in sales of free range chicken legs and thighs, compared with 10% for significantly dearer chicken breasts.
On dairy, the figures are less startling. DairyCo data for the year to July 2008 shows that liquid milk sales have started to fall back gradually, and are now at their lowest since September 2007. Its unlikely that people are using less milk, rather that they are being careful on date codes and throwing less away. All growth has gone from organic milk, possibly as consumers question the premium paid, and sales are now drifting slowly down.
On a brighter note, total cheese sales are up by 1%, but odd things are happening. The super-premium cheddar cheeses are forging ahead. At the other end of the scale, supermarkets' value cheddars are also growing. There is a trend to buying brands rather than own label cheeses, probably because the price difference between the two is now an average of 14p per kilo when a year ago it was 29p.
Some of the changes in what consumers buy are predictable, the drop in some organic sales for example, and the switch to brands when there is not much price difference with own label, and the move to buying cheaper cuts of meat.
But a nearly 5% decline in total red meat sales is alarming, and is the direct result of major price hikes in shops.
The next few months will be tricky for livestock. Consumer demand is falling, we are heading into a period of heavy supply, and seemingly the euro is weakening which could dampen export sales. As ever, supermarkets will be forcing the pace. The red meat market is important for them, and they will be evaluating their strategies carefully. Will they lower prices in their stores to boost sales, or keep prices up? Tesco's milk price reduction today probably shows the way. Prices will come down. But who will ultimately fund the fall? Hopefully the number crunchers at the NFU, DEFRA, EBLEX, BPEX and the livestock associations are keeping close tabs on the percentage of retail price going into farmgate prices. And will complain long and loudly if farmers are getting a worse deal.
Showing posts with label dairy market. Show all posts
Showing posts with label dairy market. Show all posts
Monday, 11 August 2008
Wednesday, 28 May 2008
Grass Fed Cows - A Market Opportunity?
Today's headlines announce that a recent study has found organic milk to be healthier than conventionally produced. Dig a bit deeper and we find that's not what the study found at all.
The study was carried out by Newcastle University, and published yesterday in the Journal of the Science of Food and Agriculture. It compared nutritional content of milk from three production systems - low input organic, low input non organic, and high input conventional.
And here's the interesting bit. During the outdoor grazing period milk from low input non organic systems were just as rich in good essential fats and antioxidants as organic. Both were much richer than conventional high input milk. When the cows were housed, there was little difference in nutritional composition between high input and organic.
The increased fats and antioxidants cited in the study include Omega 3, Vitamins A and E, and conjugated linoleic acid which has been found to shrink cancerous tumours. Consumers are likely to feel that milk which contains more of them is a better buy.
The study shows that the difference between the two low input systems and the high input is the amount of fresh grass grazed, with an average high input cow having just 37% of her food from fresh grass compared with around 80% for the low input animal.
Of course in our sound bite society few journalists are going to delve into the detail of a heavyweight journal article, and uncover the facts that low input non organic is just as good as organic, and that the extra richness disappears from organic during the winter period. Hence the easy headlines that organic is better.
Nevertheless, the findings are significant for the dairy industry. At last there seems to be an opportunity to divide liquid milk into another market sector rather than just talk about organic and conventional. It is not too difficult to see an added value milk on shop shelves with a selling point about being from grass fed cows and therefore naturally higher in health benefits.
The study was carried out by Newcastle University, and published yesterday in the Journal of the Science of Food and Agriculture. It compared nutritional content of milk from three production systems - low input organic, low input non organic, and high input conventional.
And here's the interesting bit. During the outdoor grazing period milk from low input non organic systems were just as rich in good essential fats and antioxidants as organic. Both were much richer than conventional high input milk. When the cows were housed, there was little difference in nutritional composition between high input and organic.
The increased fats and antioxidants cited in the study include Omega 3, Vitamins A and E, and conjugated linoleic acid which has been found to shrink cancerous tumours. Consumers are likely to feel that milk which contains more of them is a better buy.
The study shows that the difference between the two low input systems and the high input is the amount of fresh grass grazed, with an average high input cow having just 37% of her food from fresh grass compared with around 80% for the low input animal.
Of course in our sound bite society few journalists are going to delve into the detail of a heavyweight journal article, and uncover the facts that low input non organic is just as good as organic, and that the extra richness disappears from organic during the winter period. Hence the easy headlines that organic is better.
Nevertheless, the findings are significant for the dairy industry. At last there seems to be an opportunity to divide liquid milk into another market sector rather than just talk about organic and conventional. It is not too difficult to see an added value milk on shop shelves with a selling point about being from grass fed cows and therefore naturally higher in health benefits.
Wednesday, 7 May 2008
Milk Market Data Quarter 1 08
DairyCo, the new name for the MDC, has just published liquid milk market data for the 12 months to April 2008. The analysts there tend to concentrate on annual figures but a better feel for trends can be got by looking at shorter term numbers, so here's an update on what has been happening over the last 3 months.
Sales of standard Pasteurised milk have dropped very slightly as retail prices have tipped over the 60p mark to average 61p per litre. This is the first hint that consumers might be buying a bit less in the face of continued price rises.
Organic sales have grown by a small amount with average prices being stable at around 76p per litre. This gives additional support to the theory that there won't be much change in organic sales until prices go over the 80p level, at which point the gap between standard and organic will be two price points (70p and 80p), and organic sales will drop again.
Filtered milk, with its selling benefit of staying fresher for longer, grew by 6%. This is still a growth rate that would please most people, but it is a substantial slowdown on previous trends which saw growth at over 20%. Filtered still sells at a 2p premium to standard.
Modified milk sales dropped by 9%, and although this decline is alot less than the 35% drop seen previously it does further indicate that consumers just don't want a natural food like milk to be tampered with.
And finally, Channel Islands milk sales and prices have not changed at all in the short term, and neither have Soya sales and prices.
Sales of standard Pasteurised milk have dropped very slightly as retail prices have tipped over the 60p mark to average 61p per litre. This is the first hint that consumers might be buying a bit less in the face of continued price rises.
Organic sales have grown by a small amount with average prices being stable at around 76p per litre. This gives additional support to the theory that there won't be much change in organic sales until prices go over the 80p level, at which point the gap between standard and organic will be two price points (70p and 80p), and organic sales will drop again.
Filtered milk, with its selling benefit of staying fresher for longer, grew by 6%. This is still a growth rate that would please most people, but it is a substantial slowdown on previous trends which saw growth at over 20%. Filtered still sells at a 2p premium to standard.
Modified milk sales dropped by 9%, and although this decline is alot less than the 35% drop seen previously it does further indicate that consumers just don't want a natural food like milk to be tampered with.
And finally, Channel Islands milk sales and prices have not changed at all in the short term, and neither have Soya sales and prices.
Wednesday, 12 March 2008
Milk Market Trends 2007
Milk market data for 2007 has landed in the in tray, courtesy of the Milk Development Council (MDC Datum).
Many of the trends are as expected. Pasteurised liquid milk sales grew by 2% to 4.1bn litres despite a 9% price rise, confirming industry views that consumers are either not aware of the price of milk, or not concerned about having to pay more. Semi skimmed and skimmed grew again whilst whole milk declined. Plastic containers now account for 80% of milk sold in grocers. Two litre remains the most popular size.
There are some surprises though. The organic market remains small at 169m litres, and growth slowed to +4% compared with +60% in 2005, and +13% in 2006. The reason seems to be price.Once the price difference between organic and standard milk crossed two price points, with standard costing 50 something pence a litre versus organic at 70 something, growth slowed to a halt. It started to pick up at the back end of 2007, when the standard price crossed 60p. Organic prices are now close to 80p, and if they jump over that barrier, without a corresponding increase in standard, sales will probably slow again.
Sales of modified milk have plummeted, down by 35% year on year. "Modified" means with added benefits such as omega 3, and it looks as if consumers don't want manufacturers adding stuff to something valued for being pure and natural, even if the additive is supposed to be good for you. The modified milk market is now just 17m litres.
Also noteworthy is a +22% growth in filtered milk with its selling point of staying fresher for longer. Filtered milk sales have gone from 142 million litres in 2004 to 247 million in 2007, and the category is now 50% bigger than organic in litreage. Whilst growth has levelled off in the last 3 months, the rise of the category, pioneered by Cravendale, shows that it is possible to add value in a so called commodity market when a unique selling point marries a strong brand. Filtered milk sells at a 2p premium to standard which helps pay for promotional support.
The fourth surprise is the up and down nature of Channel Islands milk.The market has always been small, but for some reason it fell from 12m litres in 2004 to 7m in 2006, but turned the corner in 2007, up to 8m litres. The MDC puts this down to a promotional campaign highlighting the benefits of Jersey and Guernsey milk, and giving recipe ideas.
And finally, reading the papers you would think that lactose intolerance is a huge problem, but soya milk remains a very small market at just 81m litres, and showing 3% growth.
Many of the trends are as expected. Pasteurised liquid milk sales grew by 2% to 4.1bn litres despite a 9% price rise, confirming industry views that consumers are either not aware of the price of milk, or not concerned about having to pay more. Semi skimmed and skimmed grew again whilst whole milk declined. Plastic containers now account for 80% of milk sold in grocers. Two litre remains the most popular size.
There are some surprises though. The organic market remains small at 169m litres, and growth slowed to +4% compared with +60% in 2005, and +13% in 2006. The reason seems to be price.Once the price difference between organic and standard milk crossed two price points, with standard costing 50 something pence a litre versus organic at 70 something, growth slowed to a halt. It started to pick up at the back end of 2007, when the standard price crossed 60p. Organic prices are now close to 80p, and if they jump over that barrier, without a corresponding increase in standard, sales will probably slow again.
Sales of modified milk have plummeted, down by 35% year on year. "Modified" means with added benefits such as omega 3, and it looks as if consumers don't want manufacturers adding stuff to something valued for being pure and natural, even if the additive is supposed to be good for you. The modified milk market is now just 17m litres.
Also noteworthy is a +22% growth in filtered milk with its selling point of staying fresher for longer. Filtered milk sales have gone from 142 million litres in 2004 to 247 million in 2007, and the category is now 50% bigger than organic in litreage. Whilst growth has levelled off in the last 3 months, the rise of the category, pioneered by Cravendale, shows that it is possible to add value in a so called commodity market when a unique selling point marries a strong brand. Filtered milk sells at a 2p premium to standard which helps pay for promotional support.
The fourth surprise is the up and down nature of Channel Islands milk.The market has always been small, but for some reason it fell from 12m litres in 2004 to 7m in 2006, but turned the corner in 2007, up to 8m litres. The MDC puts this down to a promotional campaign highlighting the benefits of Jersey and Guernsey milk, and giving recipe ideas.
And finally, reading the papers you would think that lactose intolerance is a huge problem, but soya milk remains a very small market at just 81m litres, and showing 3% growth.
Thursday, 3 January 2008
Healthy, Natural and Branded Means Growth in Dairy Products
The Grocer magazine has just published its annual look at what's hot and what's not in the grocery trade. The piece on dairy products shows a trend towards healthy, natural products with brands by and large doing better than own label. Here are a few facts and figures.
Butter and Spreads
Lurpak butter is now the biggest brand having overtaken Flora. Anchor and Kerrygold have also boomed. Sadly none of these big growth brands is British which should be a source of great shame to British owned companies. At least Country Life from Dairy Crest is having a go with the introduction of Spreadable, but overall its sales are flat. On a much smaller scale, Yeo Valley have also increased sales.
Cheese
Dairy Crest do redeem themselves somewhat in the cheese market, with Cathedral City far and away the biggest brand, helped by the launch of a 30% less fat version. Somerset based Wyke Farms is also doing well, with a turnover of £21m, up 37% in sales since last year, as is Seriously Strong from Scottish Lactalis McLelland (£52m). This shows that smaller private businesses can succeed in the dairy market providing they have strong local brands. Once again its the pure products which are doing best with processed cheeses like Dairylea and Philadelphia struggling for sales. It would be good to see more brands from the milk coops, and to be fair Lake District cheese has been launched by First Milk and Tickler by Milk Link. However, there are many brands in this market and it may be difficult for the coops to see a financial return unless they come up with something genuinely new and different.
The cheese market is one where branded products are growing faster than own label with the total category up 2% and own label up less that 1%.
Milk
It used to be said that milk is a commodity and can't be branded. But Cravendale (sales £93m), Yeo Valley Organic Milk (sales £12.5m) and St.Helen's Milk from its namesake farm (sales £10m) are all proving this wrong. Flavoured milk sales are growing by 8%. Total milk sales are up 7% and own label up 5%.
Yogurts
Yoghurt sales continue to grow, again with brands outstripping own label. Muller is still the leader but Activia with its "healthy gut" message is now second with sales of £117m. An amazing success story and evidence of consumers worries about healthy eating. Its in this sector that organic sales are strongest, led by Yeo Valley and Rachel's with combined turnover of nearly £100m, or 6% of the total market.
Brands
One other branding thought is the way a brand name can be stretched across a number of different sectors as long as the basic message is relevant to all of them. Yeo Valley now has products in butter, milk, and yogurt. Rachels Organic has launched yoghurt drinks alongside its standard product. Flora does yoghurt drinks as well as spread. The benefit of course is that advertising and promotional money is spread across a number of items, and becomes more economical.
More info required?
If you need more figures please contact me via the comments section.
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