According to Milk & Dairy Products, a new Market Update from market intelligence provider Key Note, the milk and dairy market continued to expand in 2015, rising by 0.5%. This increase follows consecutive growth over the past decade, though the rate of expansion has notably slowed in recent years, following the development of a number of hostile market conditions, namely the climax of aggressive free-trade and brutal supermarket price wars. Further, the market appears increasingly threatened by the precarious surge in input costs across a number of sources, which has seen the number of dairy farms — a past staple of British infrastructure — plummet in the last decade; compounded by an increasingly international market. As such, continued growth within this context is astounding, demonstrating the sheer resilience of the market and the entrenched nature its products enjoy in the fabric of British consumption.
The liquid milk sector continues to form the largest segment of the market, though its dominance is dwindling as milk consumption per capita continues its long-term decline, as well as the significant and volatile fall in prices, driven by competitive retailers, who use milk as a primary promotional product to generate footfall through their stores. The sector’s greatest competition is cheese, which has seen its share of the industry surge in recent years, following years of consecutive growth and rising prices. Elsewhere, the rise of dairy and breakfast drinks, which have become commonplace in the market, have introduced an important new source of sales.
More broadly, diversification throughout the industry has been the foremost determinate underlying recent growth. Widespread innovation and the expansion of offerings have been crucial to stunting decline in the market, driving prosperity in the industry by exploiting developing consumer preference and buying habits, primarily in the heightening demand for convenience and health. Manifestations of health-consciousness include the surge of popularity in milk alternatives, the growing prevalence of nutritional information and advantages on packaging, and ‘lighter’ offerings on supermarket shelves throughout the market.
Product innovation has been fundamental in sustaining growth, and is projected to continue its integral importance in the future, serving as an underlying determinate of success in years to come, providing solace to the milk and dairy products market while broadening the consumer base and essentially opening new avenues of growth. Following this, Key Note expects the milk and dairy products market to further its rise, with the industry forecasted to grow in value by 6.5% over the next 5 years to 2020.
By Marco Amasanti
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Notes to editors:
Key Note’s 2016 Market Update, Milk & Dairy Products, analyses the market for milk and dairy products in the UK.
Key Note Ltd has been providing commercially relevant market information to libraries, academia and businesses since 1978. With over 1,000 titles available across 22 market sectors, and new or updated titles published every month, Key Note is one of the UK’s most prolific and respected business information providers. Within the range, some reports are written in response to particular market conditions, whereas other reports will be produced regularly year on year.