| Milk and Dairy Products
The market for milk and dairy products operates within the context of the food industry. The main sectors are liquid milk, cheese, yoghurt and chilled desserts, yellow fats and cream. The market grew by just 6.1% between 1994 and 1999, to reach an estimated value of £7.1bn. This represents a decline in the market's penetration of total food sales.
Liquid milk accounts for the largest proportion of sales. Semi-skimmed is the major product type, having taken over from full-fat milk as consumers try to reduce their fat intake. The longlife product, ultra-heat treated (UHT) milk, is gaining popularity, although the development of longer-life fresh milk is expected to meet with some success.
The next largest sector is cheese. It has benefited from the increasing sophistication of consumer taste, with sales of the more expensive, quality products growing ahead of the standard types. Stronger cheeses are now more popular among some sectors of the population. Lower-fat cheeses are a successful niche.
Yoghurt and chilled desserts is the most dynamic sector, with sales rising by 13.9% between 1994 and 1999. Products are highly suitable for today's eating habits, being both instant and suitable for solo consumption. Yoghurt is the largest segment, suppliers having successfully tailored the product's appeal to all levels, from indulgence to low fat. The chilled desserts segment was galvanised by the introduction of confectionery brands in the mid-1990s and this continues to provide inspiration for new products.
Sales of yellow fats have achieved limited growth in recent years. With the emphasis on flavour and health, many new product launches and reformulations in the late 1990s focused on providing a more buttery taste. Spreadable butters were also brought to the market, but owing to their
non-dairy content had to be classified as spreads, although Kerrygold launched a 100% natural spreading butter late in 1999. Spreads and margarines, which cover a wide range of products and fat types, account for the highest share of sales.
Cream sales have risen in value, reflecting the introduction of more
added-value products. Flavoured creams and aerosol products provide greater convenience, but face strong competition, particularly from the dessert accompaniments market.
Consumer research shows that all categories of milk and dairy products have a high level of consumer penetration, although this is declining slightly in some cases. Successful product development will focus on adding value and convenience. Taste and health appeal will also be of key importance.
Key Note forecasts slow growth to 2004 as larger areas of the market continue to mature. At current prices, market value is forecast to increase by 9.5% between 2000 and 2004, to reach £7.93bn. In real terms, this represents a slight decline in sales.
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