Volume sales of organic milk rose by 4.4% last year as it bucked the decline in standard milk to post a 15% increase in household penetration.
Organic milk is now purchased by one in four UK households, according to Nielsen Scantrack data [52 w/e 25 February 2017] cited in dairy co-op Omsco’s 2017 Organic Milk Market Report.
Volumes were at their highest since 2014, when the impact of supermarket price wars caused a retail-wide drop in conventional milk prices.
Overall distribution points for organic milk rose by 3%, driven by Asda and Tesco’s ranging of Arla’s Organic Farm Milk, the report said.
It added the “very competitive” rsp of £1.25 for four pints made the Arla product cheaper than branded and own label organic alternatives and provided “a response to non-buyers who cite their main reason for not buying organic as too expensive”.
Value sales across the category also rose, by 3.3% to £150m. But revenues failed to track the trajectory of volumes due to factors including the launch of Arla’s milk, an ongoing own-label deal in Tesco, and a push into the category by the discounters and the Co-op, said Omsco MD Richard Hampton.
He hailed the category’s performance, citing the fact organic milk attracted a million new households - “more than any other milk sector in the UK”.
“But UK organic dairy growth is still behind other key international markets, growing at a rate of just 2.2%. This is compared to the USA market which is growing 10% year-on-year and European markets, such as Germany and France, which are also witnessing significant growth,” he added.
“For this reason, exports have become an increasingly important market for UK organic dairy products. “During the past 10 years exports have grown from zero to 20% of UK organic milk sales. They play an important role in balancing UK market fluctuations, and therefore delivering a stable return to UK organic dairy farmers.”
It comes as It comes as Scottish supplier Graham’s the Family Dairy this week launched an unhomogenised organic semi-skimmed milk into 150 Sainsbury’s stores in England (rsp: £1.10/1l). The product follows the launch of a whole milk variant last August in Scotland, which is now also available nationally with Sainsbury’s.
“We’re delighted Sainsbury’s agreed to both expand their listing of the organic whole milk across the UK and become the first listing of our new semi-skimmed version in England - a testament to the product’s demand as a wholesome milk as close to its natural state as possible,” said Graham’s MD Robert Graham.
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