Challenges and opportunities ahead for dairy

Dominic Brown spoke at the 2018 Semex International Dairy Conference on 16 January in Glasgow. His presentation reflected on changing consumer behaviour and the challenges and opportunities this poses for the dairy sector.

A strong start

Dairy enters 2018 in a strong position. It's the most frequently shopped grocery category, purchased by each UK household 116 times per year. It's outperforming much of the grocery market - and contributing strongly to overall growth; for every pound of growth, 12 pence has come from dairy. It’s also a category where shoppers are trading up to premium offerings, whether that is switching from standard to added value milk or moving away from dairy spreads to more expensive spreadable and block butter

Challenges (and opportunities) ahead

However, changing consumption needs and behaviours pose a challenge for the market. Health is increasingly significant for consumers, and categories that can deliver positive health benefits (added vitamins, protein etc.) or that are viewed as more natural and less processed are likely to make the most of this dynamic. Attitudes towards dairy have changed over time as consumers' perceptions around health have evolved, but this doesn't have to be a negative for the category. For example, butter is now more likely to be eaten for health reasons than dairy spreads - as shoppers prioritise natural products over low fat.

Another challenge to the sector is changes in our diets and weekly routines. Some 95% of the time we consume dairy it's with other food or drink - like our afternoon cup of tea or morning cereal. If the decline in consumption of tea continues at the current rate, for example, it’s possible that £250m could be lost from the milk market over the next five years.

To remain at the heart of our shopping trips, dairy producers will need to ensure they're responsive to these changing consumer needs.