After last year’s farmer protests and mega M&A deals (chief among them Müller’s acquisition of Robert Wiseman), 2013 brought some much-needed calm to the milk sector. With farmgate milk prices on the rise again thanks to improving commodities markets and tighter supplies, suppliers and retailers could afford to move from fire-fighting to the business of returning value to the sector.
And their efforts appear to have paid off. The sector lost nearly £60m in 2012, but this year value sales for liquid milk once again returned to growth, rising 2.5% year on year. However, not all parts of the liquid milk market have done well: while own label has had a decent run, gaining 3.6% in value over the past year, brands have declined by 0.6%.
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The value decline on the branded side is down to some hefty losses for a small number of key brands. Medina’s Watsons brand has seen value sales decline 31% year on year, and Dairy Crest’s Country Life has lost nearly 24% of its value over the past 12 months, dropping below the £100m mark and from second to third place in our rankings in the process. Country Life’s losses are largely down to Dairy Crest’s continuing retreat from the middle-ground milk market, which saw it divest its milk delivery business in the North West to Creamline Dairies earlier this year.
For other brands, the picture is more positive. After a poor run in 2012, Cravendale has put in a strong performance this year, increasing its value by 3%. Brand manager Sophie Macaulay attributes Cravendale’s success to the brand’s focus on driving distribution of existing formats, which she says has seen sales of its one-litre PET bottle increase by 40% year on year.
“We’ve also been focusing on out-of-home opportunities for Cravendale, which has helped drive growth for the brand this year.”
To build on this further, Cravendale has already launched a new loyalty scheme for shoppers, and Macaulay says new formats to ensure Cravendale meets all households’ needs are also on the cards for 2014.
At Müller Wiseman, meanwhile, provenance will continue to be the key focus for the Black & White brand. Value sales of Black & White increased by a healthy 7.8% in 2013, and Müller Wiseman believes this is down to the brand’s ability to offer provenance credentials to its core customers in the c-store sector at an affordable price, using its six regional sub brands.
Nearly £110m of Black & White’s £112m in sales come from convenience stores, and c-store shoppers are increasingly interested in provenance and traceability, says a spokeswoman. “Our broad range of regional labels helps Müller Wiseman customers in the convenience retail sector meet this increasing consumer-led demand for provenance.”
The flavoured milk and milk drinks sector continues to be one of dairy’s undisputed success stories, delivering double-digit value sales growth for brands despite a tough competitive landscape and increased activity from own label.
Coffee drinks have once again proved to be a hit, with the Starbucks RTD range (produced by Arla) gaining a cool £5.6m in value over the past year and Emmi’s Caffè Latte range increasing sales by 26% year on year.
“We’ve been focusing on out-of-home opportunities for Cravendale”
Sophie Macaulay, Arla Foods
Mars’s portfolio of confectionery-branded milk shakes has also had a good run, with the Galaxy range putting in an especially strong performance and gaining nearly 50% in value. Mars made its debut in the RTD coffee sector with two Galaxy mocha lattes in 2012, and revamped the range earlier this year to better highlight its coffee house credentials.
Dairy Crest’s Frijj is a notable exception to the good news in flavoured milk. Although still the clear market leader, the brand has lost nearly 7% of its value over the past year, dropping below its much-heralded £50m sales milestone.
Dairy Crest has been investing in new production capacity for Frijj at its Severnside plant, and dialled back on multibuy promotions until the new capacity comes on stream, hitting sales in the process. The brand has also suffered from increased competitive pressure, admits shopper controller Adam Mehegan. “Frijj has been impacted by tough trading conditions and competitors maintaining investment, as well as increased innovation within the category.”
The performance of Arla’s Gulp range of flavoured milks is particularly noteworthy. Launched as a broadside against Frijj and Yazoo in April this year, Gulp has already managed to rack up £2.3m in sales on the back of strong distribution with Asda, making it the UK’s 10th-biggest flavoured milk brand.
To respond, Dairy Crest is promising more innovation in 2014. It’s already scrapped its Frijj the Incredibles premium sub-brand and replaced it with a new range called Frijj Supreme. Further NPD is on the way for 2014.
Meanwhile, the yoghurt drinks sector has had yet another tough year, suffering heavy value and volume losses as the EU’s clampdown on probiotics-related health claims continues to take its toll on the category.
Probiotics claims are likely to remain off the cards for brands for the time being, but the sector is showing signs of fighting back, with key brands recently repositioning themselves around vitamin rather than probiotics-related claims. For example, Danone relaunched Actimel as Actimel Plus a few months ago, highlighting its vitamin and mineral content, while Benecol jumped on the vitamin trend with the launch of new “bone health” and “heart vitamin” yoghurts drinks just last month.
The probiotics claims débâcle will be difficult to digest for the sector for some time to come and new vitamin claims won’t bring consumers back to yoghurt drinks overnight, but suppliers will be hoping this new generation of claims will prove a useful vehicle for re-engaging shoppers with the category.
A look to other milk drinks categories should give them cause for confidence: as the performance of the liquid milk sector this year has shown, sometimes turnarounds really do happen.
Read The Grocer’s full Top Products Survey.
Top launch: Upbeat’s fresh take on high protein
Protein has been one of the standout trends in milk drinks over the past year, prompting a flurry of launches, and Volac’s high-protein low-fat Upbeat has done well to gain traction. Following initial deals with Waitrose and Holland & Barrett on launch in March, it secured nationwide distribution with Tesco in September, followed by listings with Ocado and WH Smith in November. Upbeat’s march on the mults has been helped by its USP – it’s made with fresh rather than UHT milk.
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