Dairy market grows but foreign competition still dominates

Health-conscious consumers helped grow the market for dairy products by 5% over the past 12 months, but the sector is still dominated by foreign-owned brands.

In total, sales to the end of June climbed to over £7.5bn, according to a survey by Marketing magazine identifying the top-50 selling brands in the UK.

The figures from research company TNS show that the only larger grocery categories were fruit and vegetables at £7.8bn and alcohol at £8.4bn.

Five dairy brands featured in the top 50 (see table right).

German yogurt giant Mller increased its sales 4% to remain in sixth position, while French-owned Danone and Flora, part of Anglo-Dutch conglomerate Unilever, both took advantage of the public’s increased appetite for functional foods like probiotic drinks to boost their sales by 26% and 17% respectively.

While the brands may be foreign, farmers and processors here are still benefiting from the success – Mller buys 500,000 litres of home-produced milk every day and Dairy Crest and Arla Foods UK have large shares in the Yoplait and Lurpak brands, although both are imported.

However, some within the industry are questioning why UK-owned brands are still lagging behind.

Vicky Hathaway, marketing manager at the Milk Development Council, said the industry was, at last, waking up to the need to focus on what the customer wanted but there was still not enough product development.

“If there was, dairy wouldn’t be swamped with innovation from abroad.”

David Handley, Farmers for Action leader, was less equivocal.

“This doesn’t surprise me, it should tell producers what is wrong with this industry.

It’s an indictment on those processing milk in the UK.”

But farmers also had to share the blame, said Mr Handley.

“Some still think they are living in the days of the Milk Marketing Board.

They should be pushing processors and the MDC to do more to market their milk.”

A spokeswoman for Dairy Crest said its competitors like Mller had been established for many years and building up brands took time and money.

She said the firm was investing 15-20m every year in an attempt to catch up.

“Within five years we hope Cathedral City will be in the top 50 with Country Life knocking on the door.”