Monday, 23 March 2020
By Patty Clayton
The closure of the vast majority of restaurants, pubs and coffee houses in GB took a large chunk of demand for liquid milk away from the market. Higher demand in retail stores will have offset some of this, but the question is how much?
There is little data available on volumes of milk going into food service. However, based on milk volumes directed to the liquid market, and what is typically sold at retail in GB, we can estimate weekly volumes available to the non-retail sector are around 9.6m litres.
After accounting for the milk which is used in hospitals, prisons and schools[i], we estimate that around 8m litres of milk is sold to foodservice outlets per week.
An increase of 10% in weekly milk sales across retail outlets would be sufficient to use all of the milk currently going into foodservice. While there appears to be enough demand to make use of the milk diverted away from foodservice markets, it will have serious short-term impacts on those processors who are heavily reliant on this segment of the market. Even at an industry level, there will be some logistical challenges getting the milk to the right customers.
Longer term, it is left to be seen if there will be a market for this milk once consumers adapt to their new circumstances, and return to more ‘normal’ buying behaviour.
[i] we estimate this to be in the region of 10-15% of non-retail volumes.
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