UK RETAIL PERFORMANCE MIGHT NOT BE REFLECTING THE UNDERLYING DEMAND FOR ORGANIC MILK IN THE UK
This press release was posted on : 07th September 2011
Some UK retailers might not be reflecting the underlying demand for organic milk in the UK due to their response to recession, according to a market briefing presented by the Organic Milk Suppliers Co-operative (OMSCo) at the Dairy Event in Birmingham today. The warning comes as sales of organic liquid milk have dipped in recent months following a robust performance since recession impacted the whole organic market in 2008.
Nicholas Saphir, Executive Chairman of OMSCo said “the market is full of contradictions. UK sales are underperforming at a time when sales elsewhere in Europe are soaring. We have seen an overall deterioration in sales of organic liquid milk whilst some retailers have shown a return to growth. Organic milk supply continues to tighten due to exports, yet the organic premium has fallen. It is very much a UK problem.”
The briefing highlighted the changing instore environment as range and space are squeezed for ‘premium’ ranges such as organic, retailers adopt a more aggressive promotional regime on conventional milk and new competition from the emergence of premium standards in the conventional milk sector. Lower sales into the UK liquid milk market are being partly offset by strong performances from other markets, notably from overseas.
Dairy remains the largest organic sector and has proved more resilient to the downturn than many other organic categories.
Longer term, the organic sector must work harder to communicate its benefits, and to innovate as a way of spreading the word. “The conventional milk sector has seen a great deal of innovation, both in terms of milk attributes and production standards. Organic consumers buy organic for a wide variety of reasons, and the organic sector needs to do more - using innovation as a launch pad for the wider message. We are selling the diverse benefits of a production system, not an individual attribute.”
Briefing highlights:
During 2010, the overall demand for organic food in the UK fell by 5.9%, a performance that contrasts markedly with the rest of Europe, where strong growth in organic sales has continued. The UK dairy sector continued to outperform the overall organic market, supported by a strong performance from the yogurt market which grew during the period.
During 2010, Dairy remained the single largest organic sector, accounting for 30% of the entire UK organic market.
At 3%, the organic sector’s share of overall dairy sales remains the 3rd highest of any category, surpassed only by eggs (3.5%) and baby food (25%).
During 2011, there have been a range of contrasting performances:
The UK liquid market for organic milk has weakened, driven by aggressive promotional activity on conventional milk a continued squeeze on range and space and increased competition from conventional products offering premium standards in areas such as animal welfare. Latest 12 weekly data from TNS shows demand -13% year on year. However, some retailers have bucked the trend, notably Waitrose which has posted strong growth (+19% in the same period), and increasing organic share of fixture. New markets for organic milk, including ingredients and export continue to grow, partially offsetting the weaker performance in the UK liquid market.
Overall demand for raw organic milk is expected to fall by 2.5% during 2011
Increasing conventional returns are putting the organic farm gate premium under pressure. Supply is expected to decline by 3.4% during the year, as the current rate of farm expansion is outweighed by those reverting to conventional milk production. As a result, the market for organic raw milk is expected to tighten during the course of this year.
Improving performance in the organic liquid milk sector is the key to future prosperity. The sector needs to innovate and tackle the competitive threat posed by the emergence of premium standards in conventional milk.
ENDS
For more information about the benefits of organic milk, visitwww.organicmilk.co.uk
About OMSCo
The Organic Milk Cooperative - is the UK’s largest and longest established organic milk cooperative. It was formed in 1994 by a group of five like-minded farmers in the West of England, including the Elm Farm Research Centre’s farm, and the Duchy of Cornwall Home Farm in Tetbury. OMSCo members now number around 450 from Cornwall to Aberdeen, supplying the majority of the UK’s organic milk needs.
OMSCo was formed in 1994 when five like-minded
organic dairy farmers joined forces to sell their organic milk. Now with around 500 members, OMSCo is the largest and longest established UK organic milk supplier.