How much does price affect milk purchases?

Wednesday, 6 November 2019

Normally, when the price of a product changes, consumers respond and adjust their purchases. How much consumer demand changes differs across products, and will depend on the size of the price change as well as how important the price is in the decision to purchase the good.

Recent analysis by the Scottish Rural University College (SRUC) found there was only a small impact on the demand for fresh milk when prices change. This was particularly the case for private label milk, with demand for skimmed milk being the most sensitive to price changes. Regardless of the type of milk however, a 1% change in price resulted in a change in sales of less than 1%.

Sales of branded milk products showed as being more sensitive to prices. With these products, consumers reduce their purchases by a relatively larger amount than the price change. This could be due to the higher prices for branded milk products, but also because of the ability to switch to non-branded alternatives.

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Patty Clayton

Lead Analyst - Dairy

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