There’s a cabinet reshuffle under way in the dairy aisle. With sales of alternatives soaring, retailers are not only increasing their branded offerings but expanding their own-label ranges and moving them into prime chiller space.
Asda is considering merchandising fresh dairy alternatives in full bays in all its stores from 2016 after trialling the concept in 120 supermarkets, and Tesco and Waitrose are expanding their free-from ranges in response to consumer demand.
Crucially, in a category long dominated by brands, retailers are now giving more space to own-label ranges. So what can brands do to defend their territory? And what does all this mean for prices?
“Dairy alternatives are a subcategory that is currently in very strong growth in our stores”
“Interest in the category from supermarket own label is a great indicator of changing attitudes and a reflection of the shift in British eating habits,” says Vicky Upton, marketing controller at Alpro, which has spent £25m revamping its UK site to double production.
That shift in eating habits has helped the dairy alternatives market grow 19.9% in value to £243.2m on volumes up 16.5%. Brands are driving growth with value sales up 24.9%; own label, which currently accounts for just 18.3% of total category value, has seen value sales rise 1.7% [Kantar Worldpanel 52 w/e 24 May 2015].
With nut and seed milk the best-performing sector - the market has grown 73.8% from £29.8k to £51.8m [Kantar] - and brands enjoying double-digit success, Asda is preparing to add a three-strong own label range of coconut and almond milks to its line-up in October.
“Dairy alternatives are a subcategory that is currently in very strong growth in our stores,” says a spokesman for Asda. “The half-year growth [in dairy alternatives] at Asda currently stands at 19.2% in value and 19.5% in volume compared with this time last year.”
In May, Asda moved its fresh dairy alternatives from their traditional shelf above standard fresh dairy products to a full bay in 120 stores as part of a range change, and may roll out the move to all stores next year.
“Dairy alternatives are no longer just an appealing substitute for those who are lactose intolerant, but also those who perceive dairy alternatives to be a healthier option,” says Asda’s spokesman.
Aldi, meanwhile, is taking on Alpro with the January relaunch of its own-label soya milk range. Last autumn the discounter registered the trademark and logo Actileaf, similar to Alpro’s branding with a blue logo featuring a green leaf, and says the range’s value sales are up 45%.
With brands powerless against copycat own-label imitations, Californian almond brand Blue Diamond is seeking to stand out with the UK’s first reduced-sugar almond milk offering. “It’s the first of its kind in the UK in terms of reduced sugar, helping to retain Blue Diamond’s point of difference when compared with own-label products,” says John Beadle, MD of Blue Diamond’s consumer brands in Europe.
A point of difference for the brands is vital as retailers expand their ranges. Waitrose says it has ‘vastly’ extended its entire free-from range to keep up with demand and is widening it again later this year, and Tesco’s free-from range is up 51.3% overall [Kantar Worldpanel 52 w/e 29 March 2015] following a range extension, in-store free-from fairs and a trial of more than 300 new products.
Heavyweight persuasion
“Pushing boundaries through NPD and being able to inspire consumers with heavyweight marketing is where we’re currently seeing the most striking differences between brand and own-label offerings,” says Alpro’s Upton.
Alpro is aiming to inspire with the January launch of two new 500g big pot soya alternatives to yoghurt in almond and coconut - supported by TV ads running between May and July - and the April launch of a coconut-based dairy-free alternative to cream and a coconut almond drink.
With yoghurt and yoghurt drinks in healthy growth - value sales are up 15% on volumes up 17.3% - coconut milk yoghurt brand CoYo has seen its turnover soar from £600k in 2012 to £4m this year. The brand says its sales in Waitrose are “booming” and Tesco has “substantially” increased its listings, resulting in the company packing 14,000 pots of yoghurt per week in June 2014 but 70,000 per week in June 2015.
“Currently this is not a price-driven category, it’s more about consumers looking for the right products to fulfil their needs”
Increased listings have helped all the big four increase their value sales. Morrisons and Tesco are the best-performing of the big four with value sales up 22.4% and 20.9% respectively, but aside from Aldi and Lidl, whose value has increased more than 40%, the Co-op grew sales the most, up 37.6% [Kantar] - it added 15 new lines to its free-from range in July 2014 including a dairy-free yoghurt.
Coconut water brand Go Coco says it is in talks with two major retailers about its new Go Coco coconut milk shakes, launched in July, in range reviews in the new year. Sweetened with stevia and crushed dates, the US-style milkshakes have no refined sugar and come in three flavours: banana split, strawberry & cream and chocolate fudge. The brand says being such a niche product gives it an advantage over own label.
“We’re essentially a subcategory,” says Catherine Clark, digital media manager at Go Coco Drinks. “Until that element grows, it’s unlikely to be affected by own brands.”
And with the category overall still in its infancy, brands say there’s no need for them to drop prices to compete with own label. “This is still an emerging category and brands are required to drive awareness, education, trust and credibility,” says Michelle Roberts, assistant brand manager at lactose-free dairy brand Lactofree. “Currently this is not a price-driven category, it’s more about consumers looking for the right products to fulfil their needs.”
With penetration still relatively low compared with dairy, attracting new shoppers is the name of the game. “Almost one in four households are buying into the plant-based category,” says Alpro’s Upton. “Buyers are looking to stock products that sell. This won’t change.”Goats, sheep and now even camels get in on the act.
Goat, sheep and even camel. An increasing number of animal-based alternative dairy products are making their way on to the market - and winning growing listings.
Goats milk brand St Helen’s Farm has doubled its range from eight to 16 in the past five years with NPD including spreadable goats cheese in September 2014 and double chocolate ice cream in July, both of which secured Waitrose listings. The same month the Yorkshire-based brand won an Ocado listing for its goats milk and last autumn the company ran its first multichannel campaign with radio, press and digital ads.
Online retailer Muscle Food is targeting shoppers looking for a cows milk alternative with the July launch of raw camels milk made from grass-fed camels reared in the Netherlands. The unpasteurised milk contains around 20% whey protein and 80% casein protein, which the retailer says makes it suitable for those with lactose intolerance. However, the milk retails at £19 per 500ml due to the lack of farmed camels and the fact the animals only lactate when they have a calf.
Supply isn’t a problem for a Top Paddock Dairy, which launched sheep milk ice cream made from ewes on its Horsham farm in June. Madagascan vanilla flavour Friezee is made from Friesland ewes and is available in independent health food shops.
According to Mintel, dairy alternatives made from goats and sheep milk are the way forward and France is leading the way in goats, ewes and sheep milk production.
Nestlé Lactalis entered the market with a joint venture in 2014 with the launch of a two-strong range of sheep milk yoghurt sold under Lou Perac, Lactalis’ brand of sheep cheese. The NPD comes in plain and red fruit and is aimed at those intolerant to cows milk.
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