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.