Dairy must learn from bottled water, retail expert says

The dairy industry could replicate the success of branded water businesses, the DairyCo Welsh conference heard last week.

Kantar Worldpanel communications director Ed Garner explained how supermarket price-cutting would likely continue.

The average price of an own-label four-pinter has already dropped from £1.28 to 98p in the last year.

See also: Is milk really cheaper than water?

But there were lessons to learn from the bottled water market, where Volvic and Evian hold 24% of the market despite charging shoppers twice as much as unbranded options, Mr Garner said. This approach could work well in premium sectors of the market, such as yoghurt and flavoured milks.

Yoghurt sales jumped 1% by value in the past twelve months, while flavoured milk sale values rose 4.9% – even though volumes of both fell.

“Milk is cheaper than branded water, but not cheaper than unbranded water,” he explained. We need to take the same approach with our milk, to add value.”

Mr Garner told the conference the grocery sector was dividing rapidly, with good growth from premium Waitrose and discounters Aldi and Lidl, while other retailers’ sales stayed flat or declined.

Heavy, perishable milk was the perfect loss leader as supermarkets tried to tempt back shoppers, but it was not clear the discounts were working.

Asda, with the cheapest four pints of the big four at 89p, has seen fresh milk sales fall 3% by volume and 13% by value in the past year.

Butter, cream and cheddar sales were also suffering from heavy price cuts, Mr Garner showed.

“Retail turmoil is irreversibly changing the landscape and milk is caught in the crossfire.”