Has supermarket price-slashing got so bad that milk is now worth less than water?
The dairy crisis topped the national news this week and scores of journalists pinned the blame on the retailers’ relentless price war.
There’s a bigger argument here, about how price wars suck money out the chain and whether supermarket supply schemes go far enough.
Most dairy farmers would say milk is desperately undervalued, especially when four pints are sold for as little as 89p. But can we really claim it’s cheaper than water?
Analysts at levy board DairyCo have run the numbers for both branded and own-label milk and water sold through supermarkets. This is what they found:
On a per litre basis and on average, milk is still more expensive than water. That’s true for both brands and own-label.
DairyCo points out people are often confused by comparing branded water with four pints of supermarket milk.
That’s a recent snapshot. But has the gap closed in the past few years?
Branded milks have become more expensive since 2011. Meanwhile, the price of own-label milk has slid slowly towards water, but the trend is not dramatic.
Luke Crossman, AHDB/DairyCo acting senior analyst, says there might be lessons for the dairy industry in the way big companies have branded something shoppers can just get from a tap.
“Brands are one way to add value to a product and allow the company (and farmers) to push a particular message to consumers,” he says.
“However, building a brand does take time and investment, meaning it cannot be viewed as a short-term solution.”