Dairy products continue to be a valuable category for retailers, and it continues to display growth.
Spend for dairy products, which includes yoghurts and yoghurt drinks, was worth £15 billion in the past 52 weeks, representing an 18% growth versus last year (Kantar).
The ongoing consumer shift towards health continues to be a growth driver for the yoghurt category and it remains one of the category’s top three needs (Kantar).
Consumer interest in health is demonstrated clearly in the sub-categories that are showing exciting pockets of growth.
For example, high protein yoghurts have delivered value growth of more than a third (35%) and volume growth of 24% in the last year (IRI).
In addition, the impressive 6% year-on-year growth of natural yoghurt, which is seen as healthy and versatile, further shows how health-benefits are increasingly informing consumer purchasing decisions (IRI).
Danone has seen value growth among our functional health brands such as Activia and Actimel, driven by shoppers’ continued interest in gut health and immunity.
“Health will continue to be a priority for us, and this was demonstrated by the health commitments launched earlier this year. As part of this commitment, Danone UK & Ireland will ensure that at least 90% of our products by sales volume will not be high in sugar, salt or fat (HFSS) and we will never produce a HFSS product for children,” comments George Bates, Head of Category Development at Danone UK & Ireland.
“The ongoing cost-of-living crisis is also having an impact on market growth, with value becoming an increasingly important driver of the category (IRI). As a business, we are always assessing ways we can support consumers beyond the direct benefit of our products. We always try to absorb costs, make savings and provide a range of products to offer the best value for our consumers.”
The yoghurts category is complex as it needs to satisfy a wide range of consumer needs, such as indulgence, gut health, diet and natural. Ensuring there is coverage across these need states and stocking products associated with functional health benefits is vital to driving category growth.
“Grocers should consider sub-categories, such as natural yoghurts, that offer consumers best value, which we know are increasingly important,” adds Bates. “Natural yoghurt has delivered year-on-year volume growth of 6%, which contrasts with the 4% drop in the chilled yoghurts and desserts category (IRI). It remains one of the cheapest ways to consume yoghurt, with a price per kilogram 35% cheaper than the category average (IRI).”
Despite the ongoing cost-of-living crisis, consumers continue to show loyalty to functional health brands and products, with key areas of interest being gut health and immune support (Kantar). An example of this is functional yoghurt drinks which have driven growth in the category. Brands such as Actimel have added an incremental £12m retail sales volume in the last couple of years (IRI) and consumers’ interest in health is expected to continue.
Danone’s Activia and Actimel brands are its best-selling yoghurt brands in the UK market, representing over £315 million of retail sales in the past year (IRI). Activia is the UK leader in the yoghurt category, with Actimel just behind as the third largest in the market.
This summer both its Actimel and Activia brands have launched exciting new sub-ranges that support specific health needs previously under-represented by the category.
Danone’s new ‘Activia Fibre’ range is an exciting addition to the brands’ existing portfolio of gut-health yoghurts, which helps to address the fact that 91% of people in the UK are not eating enough fibre (Food & Drink Federation).
The new premium range ‘Actimel Plus’ has been designed to help support the immune system with 100% of the reference intake of vitamin D, plus a source of vitamins B6 and B12 alongside exciting flavour twists. “But our most significant NPD is the September launch of Danone’s new brand, GetPRO, in the UK. GetPRO will aim to tap into the protein segment and build on the success of our protein brands Yopro and Hipro in other markets, which already represent over half a billion Euros in revenue. These brands that currently exist outside the UK, are market leaders in several countries, including France, Brazil and Portugal,” says Bates.
“GetPRO will launch with a range of 11 products across five formats: yoghurts, puddings, mousses, fresh drinks and long-life drinks. All products will be high in protein (varying between 15g to 25g of protein per serving), with no added sugar and low or 0% fat. The launch is supported by a £4 million out of home and digital marketing campaign that will run into 2024, marking the most significant new product development from Danone in recent years.”
Heloise Le Norcy-Trott, Group Marketing Director for Lactalis UK & Ireland, comments: “The major growth drivers in the dairy category are health, nutrition, and indulgence, along with the commitment of Lactalis UK & Ireland and other leading suppliers to creative innovative products and meet consumers’ needs. Testimony to this, the UK ranks fourth highest in Europe in terms of new dairy product launches every year.
Despite current economic pressures affecting our food choices, British consumers still want to be well and in good health, and we also want to enjoy our food, and the dairy category addresses both requirements.”
Focusing on the cheese sector, British cheese finds its way into the fridges of 94% of UK adults, offering taste, nutrition and indulgence, and cheese lovers can enjoy over 700 named British cheeses.
Looking at the overall category, across most cheese types we have witnessed a rise in value sales but a decline in volume (Circana) in the 12 months to 17 June.
The total cheese market was up 14.3% in value to £3.1bn, and down 4.4% in volume. Block cheddar, the UK’s biggest cheese subcategory, increased 17.2% in value to £892.9m and fell 3.2% in volume, less than the total market. Sliced and grated cheddar, the second biggest subcategory, increased 18.8% in value to £656.2m and fell 4.3% in volume, in line with the overall trend.
Cheddar remains by far the country’s favourite cheese, accounting for just over half of all nationwide category sales, and Lactalis UK & Ireland’s Seriously, Galloway and Orkney and Cricket St Thomas brands are leading players. Cheddar sales have inevitably been impacted by ongoing rising costs, combined with consumers tightening their belts. Cheddar’s performance has been largely representative of the wider cheese market this past year, which as a whole is up 14.3% in value to £3.1bn and down 4.4% in volume. There have been large increases in average purchase, and a decline in frequency.
Block cheddar, the biggest cheddar subcategory, has performed relatively in line with total cheese (Circana), with a 17.2% value sales increase to £892m versus the total market’s 14.3% rise, and a 3.2% volume drop drop, less than total cheddar’s 4.4% drop as stated. Sliced and grated cheddar, the second biggest subcategory, increased 18.8% in value to £656.2m and fell 4.3% in volume, in line with the overall trend.
Catriona Mantle, head of milk, organic and yogurt at Arla, comments: “At Arla we’re proud to be home to market leading brands in the milk category, which include; Arla B.O.B, Arla LactoFREE, Arla Cravendale and Arla Big Milk. Arla Big Milk remains the fastest growing milk brand in Arla with +28% value growth (source: Nielsen 52w/e 15/07/2023).
“It’s clear across the category that shoppers are feeling the impacts of the cost-of-living crisis, which has resulted in some switching to private label milk and reducing the amount of milk they buy overall. The milk category is worth £4.2bn value, but volume is down by three per cent (source: Nielsen 52w/e 7/15/2023), due to shoppers buying less milk. It’s clear that more needs to be done to disrupt the milk aisle in order to attract new shoppers into the added value milk category, as shoppers are spending 3-11 seconds at fixture.”
Arla Cravendale was launched to challenge the perception that ‘Milk is just milk’, and having launched 25 years ago, it was the first added value milk available in a category that was in need of a refresh. Whilst there is still a proportion of shoppers that hold the ‘milk is just milk’ belief, there is increasingly much greater interaction with the added value segment.
Arla’s added value milks are more expensive than standard fresh milk, but as the UK’s largest dairy cooperative, it is working to add the most value into the category, in order to return the best milk price for our farmer owners. Celebrating what sets its added value milks apart from own label is crucial, in order to justify its premium to shoppers, which is why Arla branded milks has exciting plans ahead for 2024.
Organic has been in growth for the last 10 years, but due to the cost-of-living crisis, growth has stalled this year. Therefore, Yeo Valley Organic will continue to focus on top-of-mind awareness, relevancy and strive to provide uniqueness through distinctive emotive comms.
Arla continues to maintain the top two positions in the BSM category, with Lurpak® at number one, and Anchor as the number two brand.
At a total BSM category level, the category is seeing value growth of 13.3%.
Block butter and Spreadable continue to see long term continued growth in occasions due to shoppers seeking more natural products. In terms of key occasions for BSM, these remain as; breakfasts, in-home lunches and evening meals – with usages still as traditionally seen – including spreading, topping, savoury cooking and baking. Savoury cooking and BSM used as a topping is seeing growth versus pre-pandemic as well.
Over the longer term there is a shift into the Spreadable and Block subcategories from a value and volume perspective.
Anchor block butter is seeing value growth (+5.3%) due to competitive pricing versus own-label alternatives, which shows the strength of the brand.
Jose Alves, Head of Häagen-Dazs UK at General Mills UK, comments: “We know that more and more consumers are looking for healthier alternatives to their favourite ice cream without having to compromise on taste and experience. Our mini cups empower consumers to make a more conscious choice as the format taps into the mindful indulgence trend by using high quality, premium ingredients in portion-controlled sizes.”
Big Night In occasions are more important than ever, as they provide an opportunity for retailers to drive sales at a time when we’re all feeling the pinch. According to new research commissioned by Häagen-Dazs, more than a third of shoppers would choose a Big Night In (BNI) over going to a pub, bar, or restaurant to save money over the next six months, with one-in-three already hosting a BNI at least once a week (KAM Media).
“Alongside wine and other snacks categories, premium treats, like luxury ice cream, are frequently added to baskets for a Big Night In,” adds Alves. “We’re helping retailers maximise the occasion by providing a range of flavours and formats to suit different tastes.”
Despite this opportunity, Häagen-Dazs’ research conducted last year, revealed that whilst one in three shoppers were hosting a big night in occasion weekly and that 60% of consumers were planning to choose ice cream for a movie night at home, almost half – 43% – couldn’t find the dessert options they wanted in-store (KAM Media). To maximise the occasion further, retailers should ensure a broad range of dessert and treat products.
“Luxury ice cream is the 4th most impulsive category in store, so visibility is key. Make sure shoppers know where your freezer is and display POS. Pairing complementary categories together, such as alcohol and sharing size snacks, presents the opportunity to up-sell occasions like the big night in,” suggests Alves.
“Support your ice cream offering with a high visibility location for your freezer. We know that shelf space remains at a premium, so it is important to allocate space to year-round growth drivers such as Pints or Mini Cup formats, which have a higher share of sales in winter months.”
Paul Wiseman, Marketing Manager at Lindahls, comments: “The Yogurts and Chilled Desserts (YCD) category in the UK within Major Multiples and Convenience is worth £2.74bn, +6.8% vs Year Ago (YA). In volume terms, that represents £631.7kT, -7.1% vs YA (Circana).
“Discounters and bargain stores also add £919.2m in further value, which is +23.8% vs YA equating to 281kT, +7.5% vs YA (Kantar Worldpanel).”
Price inflation is a major driver of the increasing retail sales value in YCD, with most segments within the category actually currently in volume decline. However, there are exceptions, with high protein products like Lindahls continuing to perform strongly, driving double digit growth in both value and volume.
Within high protein dairy we have seen a growing number of new sub-categories responding to different needs and occasions. Lindahls was the first major manufacturer to launch protein puddings into the UK market and they are now worth £7.5m at RSV and are growing at over 275% year on year (Circana).
The core Lindahls Kvarg range was introduced in 2018 with 2 flavours, Raspberry and Vanilla. Lindahls Kvarg now is now available in 7 flavours, is worth £28.1m at RSV and continues to grow double digit at +37.6% latest 52 weeks (Circana).
The brand’s biggest selling line is Raspberry Kvarg with value sales of £7.26m at RSV, up +31.3% latest 52 weeks (Circana). There is also a rise in popularity of Indulgent flavours, with the White Chocolate Kvarg and Stracciatella Kvarg both selling strongly.
In July Lindahls expanded its Pro+ range of 150g pots with the launch of a new flavour, Blueberry Muffin. This flavour sits alongside other more indulgent flavours, namely Lemon Cheesecake and Banoffee Pie in the Pro+ range which offers 18g of protein per pot and a unique 50:50 mix of whey and casein protein.
The brand also launched a coconut protein snack bar, which has 6.4g protein per serving.
Susan Nash, Trade Communications Manager at Mondelez International, comments: “The cream cheese category, including cheese snacks, is continuing to grow by +2.3% year on year (Nielsen) – suggesting that shoppers are still buying into the category despite the challenging economic circumstances of the past year. These circumstances do mean, however, that if shoppers are going to spend their money on these products, they’re looking for superior taste and quality from their investment. This is reflected in the fact that 67% of people would rather buy fewer amounts of their favourite snack brand, than buy the less expensive generic alternative (Global State of Snacking Report).
Philadelphia has met the needs of consumers for more than a century and has become a much loved and trusted brand due to its iconic fresh and creamy taste. While spend and purchases are under increasing evaluation, shoppers can put their trust in Philadelphia to deliver. As the UK’s number one cream cheese brand (Nielsen), it offers a strong range with various flavours, fat levels and formats. Shoppers can enjoy the soft white cheese by itself with Original, or paired with a multitude of accompaniments such as Sweet Chilli, Chives, Salmon and Garlic and Herbs as well.
Dairylea is the UK’s number one (Nielsen) processed cheese, and with products in the Spreads & Portions, Slices and Snacking segments, the brand meets a range of consumer needs. The brand has been an iconic staple since 1950 and is present on 1 out of 2 UK families’ shopping lists. As the category leader (Nielsen), Dairylea continues to innovate and invest to bring new products to market that cater to a range of occasions, formats and price points.
“We know that with the current economic landscape, consumers will be increasingly evaluating their choices in this category,” adds Nash. “Dairylea and Philadelphia have, between them, over 170 years of experience crafting creamy soft cheese, spreads and snacks and throughout these rich histories, they’ve built up trust among shoppers that they can consistently deliver on both taste and quality. Dairylea Triangles were first brought to market in 1950, for example, while Philadelphia’s first product dates back to 1880. Families have loved and trusted our cheese brands to deliver good-value, delicious snacks for generations – and can continue to in the future.”
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