Dairy - drinks 2024: Arla brands on top as milk suffers volume fall

Arguably the year’s biggest milk story hit the headlines as this year’s Top Products was being put to bed.

In late November, Arla announced a trial of methane-reducing cows feed additive Bovaer – in a joint initiative with Morrisons, Tesco and Aldi. The move marked the latest step in a push by the dairy co-op to collaborate with retail partners – and even rivals such as Müller – on emission reduction projects.

It quickly sparked a social media backlash, where furious users claimed the additive was unsafe and called for a boycott of Arla products – even posting videos pouring Arla milk down the drain – taking the shine off what the supplier had hoped would be a positive development.

It remains to be seen how much of a problem this might prove for Arla in the future. But Arla’s present performance has been stellar, with strong volume growth for its biggest milk brands. Cravendale, Lactofree, Arla and Yeo Valley have shifted an extra 19.6 million litres between them.

That’s quite a feat in a branded milk market where volumes are down 3.3% – or 30.5 million litres. The sector “has faced volume declines due to distribution and promotional losses, compounded by inflation”, explains NIQ senior analytics exec Ishita Gupta.

For the market-leading Cravendale, a 3.9% cut in average price per litre was key in growing volumes. Catriona Mantle, Arla associate category director, points to work with retailers to buck that trend of fewer promos via a targeted campaign over the past year.

The supplier’s Lactofree and the Arla masterbrand, which includes products such as B.O.B. and Big Milk, enjoyed a strong year thanks to “new listings and distribution gains”, Mantle adds.

Other key milk brands weren’t so lucky. Take Müller, which delisted its Barista line in July due to poor returns. The brand has seen value drop £8.1m on volumes down 10.6%.

Nevertheless, Gemma Hancock, Müller Milk & Ingredients commercial director, stresses the dairy giant’s branded milks have had a positive year overall. They’ve seen “record results across wholesale and foodservice channels”, she says.

Freshways has also lost share, having shed £19.9m and 19.1 million litres. That’s milk’s biggest absolute volume loss of the year.

Freshways declined to comment on the fall and stressed that not all its sales are captured in our NIQ data. Like Müller, it remains bullish about its performance. The processor is “seeing record milk volumes across the business”, says a spokesman, particularly in convenience and foodservice.

While sales for some traditional milk brands have soured, makers of milk alternatives have tasted relative success. Alpro, for instance, has grown value and volumes by 1.9% and 1.4% respectively. This growth comes in the wake of “a challenging environment” in recent years due to inflation, says Tom Kerr, Danone UK head of category management. It will lead “to a rebound in category volume,” he believes.

Oatly, the UK’s second-biggest maker of milk alternatives, has also added value. It’s up 1.3%, but volumes have slipped by the same percentage on a 2.7% rise in average price per litre.

Oatly GM Bryan Carroll is relaxed about this slowdown. The brand continues to work to “convert the most new shoppers to the category”, he says. October saw it launch the out-of-home push ‘It Works in tea’ alongside grime artist Giggs. The activity urged Brits to overcome their reluctance to add oat milk to their cuppas.

Wellness drives drinking yoghurts

For makers of drinking yoghurts, it’s tapping wellness trends that’s been key to performance. The gut health craze has paid dividends for top two brands Actimel and Biotiful Gut Health. They’ve added a combined £18.6m – more than half the booming sector’s absolute value growth.

Biotiful’s performance was particularly impressive. It has grown volumes 32.6% after seeing “increased physical availability” coupled with innovation “which has unlocked new occasions and consumer need states”, says founder and CEO Natasha Bowes.

That innovation has included high protein kefir drinks in August (see below) and an organic kefir range in September.

It even launched an own-label version in Aldi. Beautiful Everyday was first thought to be a copycat product when it launched in Aldi stores in July. But it turned out to be manufactured by Biotiful, as part of its plan to reach as many parts of grocery as possible.

Like Biotiful, flavoured milks have enjoyed increased demand and distribution gains. Volumes are up 9.7%. Number one player Starbucks continues to capitalise on the popularity of RTD coffee, notes NIQ’s Gupta. The brand has shifted 3.8 million more litres. Yazoo, Emmi and Shaken Udder have also put in strong showings and are now worth an extra £199m between them.

Whether this performance continues next year will likely depend on if experts are right in their prediction that farmgate prices will increase.

Read more: Dairy drinks 2023: Plant-based decline hits milk market