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Milk & Dairy Products Market Report 2005
Key Note Publications Ltd, Aug 2005
The UK market for milk and dairy product grew by 9.3% between 2000 and 2004, to reach a value of £7.72bn. The main sectors involved in this market are those of liquid milk, cheese, yoghurt and chilled desserts, yellow fats and cream.
Liquid milk continues to account for the largest share of sales although prices have been kept down by many retailers as part of wider low-pricing strategies. In 2004, a number of groups introduced branded milks, many promoted by stressing health factors. These products offer a route to more added value in the market through stronger differentiation.
The cheese sector has managed to grow year on year since 2002. Many consumers now have more sophisticated tastes which has led to increased sales of a wider range of varieties and regional products. The sector has also successfully introduced healthy eating products. More recently, suppliers have been introducing more convenient and portable products for eating `on the go'.
Yoghurts and chilled desserts have been breaking away from a cycle of rolling promotion by placing a greater focus on products and brands. Yoghurts continue to benefit from a positive health profile with functionality adding a further dimension to established low-fat criteria.
Yellow fats have seen more limited growth, although functional brands such as Flora pro.activ have offered a new focus of interest and successfully targeted the UK's ageing population. Cream has also managed some increase in value, with added-value products again being the driver of such growth.
The UK dairy market is served by a wide range of suppliers ranging from large integrated and international dairy co-operatives to smaller regional producers. There has been some consolidation in the sector, with a move towards larger and more vertically integrated businesses with a shorter supply chain.
There have also been some developments in the retail environment. The major multiples, which account for the bulk of sales, have been reviewing their supply chains. In 2004/2005 all the major players took the decision to either change or to rationalise milk supply and the full impact has yet to be felt.
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