Covid-19: Retail milk demand balances foodservice loss

Increased demand for liquid milk through retail outlets compensated for the collapse in the foodservice sector during the coronavirus pandemic, market analysis has shown.

The analysis, carried out by the AHDB, looked at how shifts in consumption affected the way milk was utilised by manufacturers under the various lockdown measures.

Overall, milk supply was unchanged on year earlier levels,  at 15bn litres. 

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Lead dairy analyst Patty Clayton said data was expected to show manufacturers accelerating the trend of processing liquid milk to long shelf-life products as the foodservice and hospitality sectors closed down.

However, this doesn’t appear to be the case, with the strong increase in demand for liquid milk in retail markets compensating for lower requirements in the foodservice and hotel sector, Ms Clayton said.

The most notable drop in long-life products was in milk powder processing.

Following a large jump in volumes going into powder production in 2019, the volumes directed into this product fell by 13.4% to 2018 levels, Ms Clayton explained.

The higher retail demand for fresh milk, along with strong demand for milk for cheese production, meant there was less need to put milk into powders.

The lower spring peak, due to active curbing by farmers, would have also been a factor, she said.

The five-year trend of increasing volumes of milk being diverted into products such as cheese, yoghurt and butter continued.

Within the growing cheese sector, cheddar production recorded the largest year-on-year increase to meet demand for home baking.

“Part of this growth is reversing the lower volumes utilised in 2019, but the large uplift in retail sales will have been the main driver,” Ms Clayton said.

Regional cheeses also saw strong growth and this was one area where the switch towards longer shelf-life products, from soft varieties to harder packaged products, emerged.

For butter production the steady increase in milk use continued.

The additional 68m litres used was a relatively small increase on the already high levels of uptake in 2019. However, 2020 usage levels are 21% up on the more normal 2018.

Source: Defra/AHDB