Morrisons' Milk for Farmers: will shoppers really pay more?

The launch of Morrisons’ Milk for Farmers brand in the midst of raging farmer protests last week has generated plenty of headlines - and raised many big questions.

The most intriguing of those is whether there is genuine consumer demand for more expensive “ethical” milk or whether cheap prices will trump good intentions in the end.

When it goes on shelf in the autumn, Milk for Farmers will command a 10 pence per litre premium over standard own-label milk. Based on today’s retail price of 89p for a four-pinter, the new milk will go on sale for about £1.13 - a big increase on a household staple.

So what are its chances of success?

A new consumer survey by Harris Interactive, conducted in the wake of Morrisons’ announcement, suggests a significant number of shoppers are willing to pay extra. Of 1,005 consumers surveyed, 72.4% say they believe the retailer has “done the right thing” in launching Milk for Farmers and over half (53.9%) say they are likely to buy the new milk.

The majority (78.3%) also agree it is good for consumers to be able to choose themselves if they want to pay extra for milk, and 62.9% say they are generally willing to pay more for milk to ensure farmers get a fair price.

“There is clear public support for Milk for Farmers - the British people remain supportive of British farmers and clearly have genuine concern for their welfare and making sure they stay in business,” says Lucia Juliano, head of consumer & retail research at Harris.

“We have seen this in previous studies, where farmers are consistently in receipt of public sympathy compared with the supermarkets who are typically seen as ‘the profiteering bad guys’. Morrisons has made a bold statement to its shoppers about one way to support UK farming.”

The findings from the Harris poll are echoed in a new report from farmer-funded body AHDB Dairy, which pulls together consumer surveys, retail sales figures and government data to better understand the impact of the supermarket milk price wars. Citing a YouGov survey from April, it too concludes many shoppers (79%) buy into the idea of paying extra for the benefit of farmers - but not necessarily quite as much as Morrisons is looking to charge. In the study, only 18% of consumers said they would pay more than 20p extra for a four-pinter; Milk for Farmers will come at a 24p premium.

Despite this, AHDB Dairy head of marketing and communications Amanda Ball says the findings overall suggest a “good appetite” among consumers for paying more to support farmers.

Shopping habits

Of course, what people say they will do and what they actually do often differs - and the AHDB report also highlights evidence that consumers change where they shop depending on who offers cheaper milk.

“When retailers drop their milk prices, it does affect the amount of milk sold in that store,” admits AHDB’s head of market specialists Michael Archer. “Consumers aren’t completely insensitive to milk prices and they do make decisions to switch between retailers based on milk prices.”

Historical switching data is of limited use for predicting shopper behaviour around Milk for Farmers, however. As Ball points out, shoppers have not previously had the choice to pay more and know that extra will go directly to farmers. “There might be some people who will always be sensitive to the price of milk, but others might be willing to pay more,” she says. “Giving consumers that choice is an important first step.”

The experience of Fairtrade, especially for bananas, highlights just how important this notion of choice and direct support to producers is.

Studies conducted by Fairtrade have previously found consumers are willing to pay as much as 10% more for a Fairtrade product “if they know the extra will go to those who earn it, if it means producers also get a fair price,” says Fairtrade policy and public affairs director Barbara Crowther. However, she warns shoppers tend to be more trusting of independently verified labels, and increasingly expect supermarkets to behave responsibly towards all the farmers supplying them, not just those supplying specific products.

James Brown, partner at pricing experts Simon-Kucher & Partners, adds there are further key differences between Milk for Farmers and Fairtrade, such as how close to home it is and how “directly and explicitly” Morrisons is making the link. He describes the new brand as a “fascinating and high profile experiment”, which will show exactly how much shoppers are willing to pay to know suppliers are being treated fairly.

In the short term, the brand stands to benefit from heightened consumer awareness around milk prices created by continuing campaigns from farmers. Ball says AHDB Dairy has “never seen this level of public interest in milk prices”, with the organisation’s website and social media accounts inundated with queries on how people can pay more for milk to support farmers. “We didn’t even have that back in 2012; there has been quite a difference in response this time around,” she says.

Whether such interest will translate into actual sales, of course, remains to be seen. But regardless of whether Milk for Farmers proves a hit at the tills or not, it will provide an answer to one of the most burning questions in the current debate about milk: how many consumers really are willing to pay more, and how many will always choose cheap when it comes to the white stuff.