Dairy demand through retail subdued as shoppers scale back

Wednesday, 22 March 2023

As the cost-of-living crisis continues, consumers are changing their shopping habits to counteract price rises. Volumes of dairy have been impacted and quantity sold through retail declined in the year to 19 February 2023 according to Kantar.

The decline in volume for dairy also relates to how consumers are using dairy in the home and our recent article highlights how changing consumer needs have impacted dishes with dairy. Overall spend increased as average prices increased although with this, we have seen consumers trade down in dairy.

Spend on cow's milk increased by 19.2% due to a 26.9% increase in average price to £0.78/litre. This equates to 16 pence increase on last year’s price. Volumes declined by 6.1% year-on-year because, while 98% of households still bought milk in the last year, shoppers have dropped how frequently they buy it from 66 to 64 times on average per year – still more than once a week on average. Semi-skimmed milk accounted for 62% of milk volumes but drove 65% of the decline. 

Kantar data shows volumes of cheese declined by 4.0% year-on-year with cheddar seeing the biggest losses, closely followed by speciality and continental varieties. Processed cheese was the only category were there was volume growth as more shoppers purchased sliced cheese. Average price rises of 13.6% year-on-year led to a 9.1% increase in total spend on cheese. Despite seeing the heaviest declines in sales, Cheddar continued to account for 49% of cheese volume sales.

Yellow fats (butter and margarines) saw volume declines of 7.1% in the period, while spend grew by 12.3% (Kantar). Block butter and spreads & margarines saw volume losses, down 7.0% and 9.2% respectively. Plant-based spreads saw both spend and volume growth due to an increase in the number of products coming to the market. However, growth in plant-based spread sales volumes was not enough to balance declines in block butter and spreads and margarine.

Latest 12 week ending period seeing declines easing 

The latest 12 weeks of data suggest that whilst decline is still the order of the day, volume losses are beginning to soften with milk, cheese and yellow fats all seeing declines ease. Cheddar is now down by only 2% while feta and salad cheese remains the star performer. 

As we expect the cost-of-living crisis to continue through much of 2023, we predict volume sales of dairy to continue to decline over the course of the year. For more detail, see our Agri-market Outlook and for more detail on the dairy retail market, see our retail dashboard

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Grace Randall

Retail and Consumer Insight Manager

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