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UK: Organic Milk Shortages Begin
The
UK organic dairy market is starting to experience undersupply again
after four years of oversupply.
Consumer demand for organic milk is exceptionally high this year with
many retailers reporting sales growth in excess of 30%. Growing consumer
awareness of the health benefits of organic milk is driving market
growth.
Various scientific studies are showing organic milk to have greater
nutrient quality than non-organic milk. In February 2004, a study by the
Institute of Grassland and Environmental Research in Wales found that
organic milk contained at least 64% more Omega 3 fatty acids than
conventional milk. In the same year, the Danish Institute of
Agricultural Science found organic milk to have 50% more vitamin E than
conventional milk. Another study showed organic milk to have higher
levels of conjugated linoleic acid (CLA), which boosts the immune
system.
Affirmation of the greater nutrient quality of organic milk has
broadened demand to consumers seeking functional beverages. Organic milk
is being increasingly bought because of its associated health benefits
with one leading producer focusing on this in its marketing campaigns.
The new position of organic milk in the marketplace is putting it in
direct competition with functional milk.
Functional milk is the fastest growing in the UK market for value-added
milk, which is expanding as British dairies look to move away from
commodity products. Dairies are investing heavily in new product
development with a number of new launches witnessed this year. Dairy
Crest’s St. Ivel Advance has been the most successful since its
introduction in May 2005. Fortified with omega acids from fish oils, St
Ivel Advance is becoming the leading brand of functional milk in the UK.
By no coincidence, St Ivel Advance is competing head on with an organic
milk brand for the Innovation in Dairy Product Development Award. St
Ivel Advance and Altogether Better are finalists in the MDC Innovation
award for the beverage category.
The Altogether Better brand was launched by the Organic Milk Suppliers
Co-operative in February 2005. The brand is showing high growth in an
organic milk market dominated by retailer private labels. Less than 20%
of the organic milk sold in the
UK
is branded. High market growth rates would normally attract new
entrants, however tightening supply is becoming a major concern.
Exceptionally high demand is leading to supply shortages with one
leading producer starting to import organic milk from Denmark. Between
10-20% of the organic milk used by the dairy company is being imported.
Although the dairy states imports is a temporary measure, more companies
are likely to start importing if British supply continues to fall short.
Related Reports:
#1201-55 The
UK Market for Value-Added Milk
#1202-43 The
UK Market for Organic Dairy Products
Posted: November 29th 2005
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