ISBN 1-86765-641-5

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Executive Summary

Table of Contents

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EXECUTIVE SUMMARY

The milk and dairy products market experienced growth of just 8.8 percent between 1993 and 1998, to reach £7.2bn. This was behind growth in the food sector as a whole, leading to an overall decline in market share for these products. Much of the relative decline was attributable to higher spending on processed and premium foodstuffs by consumers trading up following the recession. However, the market also contains a number of essential products which tend to retail at competitive prices, as well as own-label and manufacturer brands.
There are five main sectors in the market: liquid milk, cheese, yellow fats, yoghurt and dairy desserts, and cream. Growth across the sectors has been varied in 1998. Milk, yellow fats and cream performed poorly, while the remaining segments showed increases in market share. In a move to arrest the decline in spending on commodity products, a number of processors are now focusing on added-value and branded products to build market share.
Wider eating trends continue to influence the market, and the earlier focus on healthy eating has given way to an emphasis on taste and flavour. This has been evident in both the cheese and yellow fats sectors, where quality has assumed greater importance. The yoghurt and chilled desserts sector has benefited from the extension of brands from other areas of the food market -- particularly confectionery. Character licensing and usage is also on the increase.
The supply side continues to be dominated by a small number of large companies. Some operate across a number of market sectors, while others concentrate on specific products. Retail distribution, as in so many areas of the food market, is controlled largely by the major supermarket chains. Smaller retail outlets tend to offer top-up and emergency buys only, concentrating on branded items. Delicatessens also take a shrinking share of the cheese market. The doorstep delivery of milk has now declined to a third of the market in volume terms, although many in the industry feel this indicates a bottoming out of the trend.
The milk and dairy sector faces a number of issues in the short to medium term. The European Union (EU) is facing pressure from a number of sides on milk quotas, which affects the primary raw material in the industry. Milk Marque is under investigation by the Monopolies and Mergers Commission (MMC), and the processing sector is suffering from overcapacity.
Key Note anticipates that the value of the market will remain stable or show a slight decline in real terms in the short to medium term. Processors will endeavour to protect their market share through further added-value product innovation and brand building.

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TABLE OF CONTENTS

Executive Summary

Market Definition

MARKET SECTORS

MARKET POSITION

MARKET TRENDS

Table 1: The Milk and Dairy Products Market by Sector by Value (£m and percent), 1998

Table 2: Index of Consumer Expenditure on Milk and Dairy Products and on Food at Current Prices (1993=100), 1993-1998

Market Size

THE TOTAL MARKET

MARKET SECTORS

FOREIGN TRADE

Table 3: The UK Milk and Dairy Products Market by Value (£m at rsp), 1993-98

Table 4: The Liquid Milk Market by Value (£m), 1993-1998

Table 5: The Liquid Milk Market by Sector by Value (£m and percent of total), 1998

Table 6: The Cheese Market by Value (£m), 1993-1998

Table 7: The Cheese Market by Sector by Value (£m and percent of total), 1998

Table 8: The UK Yellow Fats Market by Value (£m), 1993-1998

Table 9: The Yellow Fats Market by Sector by Value (£m and percent of total), 1998

Table 10: The Yoghurt and Chilled Desserts Market by Value (£m), 1993-1998

Table 11: The Yoghurt and Chilled Desserts Market by Sector by Value (£m and percent of total), 1998

Table 12: The Cream Market by Value (£m), 1993-1998

Table 13: The Cream Market by Value by Sector (£m and percent of total), 1998

Table 14: Exports of Dairy Products (£m), 1996 and 1997

Table 15: Imports of Dairy Products (£m), 1996 and 1997

Industry Background

RECENT HISTORY

INDUSTRY CONCENTRATION

DISTRIBUTION

TRADE ASSOCIATIONS

Table 16: Number of Milk and Milk Products Companies by Turnover Size (£000), 1998

Table 17: Distribution of Milk by Channel by Volume ( percent of total), 1994, 1996 and 1998

Competitor Analysis

THE MARKETPLACE

MARKET LEADERS

ADVERTISING AND PROMOTION

Table 18: Leading Companies in the Milk and Dairy Products Market, 1998

Table 19: Main Media Advertising Expenditure on Milk and Dairy Products (£000), Year to September 1997 and 1998

Strengths, Weaknesses, Opportunities and Threats (SWOT)

STRENGTHS

WEAKNESSES

OPPORTUNITIES

THREATS

Buying Behaviour

GENERAL TRENDS

PURCHASING BY AGE

PURCHASING BY SOCIAL GRADE

PURCHASES ON THE BASIS OF HOUSEHOLD SIZE

Table 20: Penetration of Milk and Dairy Products ( percent of Housewives), 1993-1998

Table 21: Purchasers of Milk and Dairy Products by Age ( percent of housewives), 1998

Table 22: Purchasers of Milk and Dairy Products by Social Grade ( percent of housewives), 1998

Table 23: Purchasers of Milk and Dairy Products by Household SizeÅ ( percent of housewives), 1998

Outside Suppliers to the Industry

PRIMARY SUPPLIERS

SECONDARY SUPPLIERS

TERTIARY SUPPLIERS

Current Issues

VERTICAL INTEGRATION MOVES BY MILK MARQUE

MONOPOLIES AND MERGERS INVESTIGATION

OVERCAPACITY IN THE LIQUID MILK SECTOR

POSSIBLE MILK LINK WITH CROHN'S DISEASE

Forecasts

FORECASTS 1999-2003

DEMOGRAPHICS

MARKET SEGMENTATION

PRODUCT DEVELOPMENT

COMPETITOR FORECASTS

Table 24: The Forecast Milk and Dairy Products Market by ValueÅ (£m at rsp), 1999-2003

Table 25: Age Profile of the UK Population (000), 1996 and 2006

Company Profiles

INTRODUCTION

DEFINITIONS

FURTHER INFORMATION

Further Sources

ASSOCIATIONS

PERIODICALS

DIRECTORIES

GENERAL SOURCES

HBI UK INFORMATION SOURCES

GOVERNMENT PUBLICATIONS

OTHER SOURCES

Text © 1999 Key Note

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Last updated by Jacob van Eldik 19th January 2000