MODERNISATION CHALLENGE:  BY SHELLEY WRIGHT( SCOTLAND CORREPSONDENCE) 

THE UK’s market for fresh dairy products is no longer safe from import competition, particularly from eastern Europe, and the industry must modernise to see off the challenge.

Until now, domestic milk producers have almost exclusively supplied the fresh market in this country. But that is changing quickly, says Joanne Denney-Finch, chief executive of the Institute of Grocery Distribution, a charity that helps growth in British industry by bringing together intelligence, opinion and experience of the food and grocery chain.

“I recently saw a fresh dairy product from Poland on display in a UK supermarket within 24 hours of manufacture,” she told delegates at the Semex dairy conference in Glasgow this week. “We can’t take the home market for granted, even in fresh milk.”

The only response to such competition was for the UK dairy industry to move away from commodity products, use every available method to improve efficiency, and to strip out all unnecessary costs from the supply chain, she said.

 In terms of de-commoditising, Ms Denney-Finch said: “The evidence I have seen, particularly from IGD”s consumer research, suggests the market is ready for a new chapter, in which there is much greater tailoring to individual needs with more emphasis on quality and less on price.”

On improving efficiency, she said benchmarking was vital. “It is not new. But like walking up a ladder, you get a better view the higher you go.” As far as stripping all unnecessary costs from the chain was concerned, she said: “We have found that if you walk any chain from end to end you will always find a raft of improvement opportunities.”

IGD had co-ordinated studies that covered red meat production chains. Cost savings identified ranged from 10%-20% of the final selling price. “These opportunities have been shared at all points of the chain,” she added.

The same could happen in the dairy sector. A three-year study has just been launched covering eight dairy chains. And Ms Denney-Finch is hopeful that similar savings to those found in the meat industry can be identified in the dairy sector.

shelley22@bun.com