|July 15, 2004,
as reported by just-food.com: Healthy market
growth rates appear to be signaling the end of oversupplies
in the UK organic dairy sector, according to new research.
Market growth coupled with declining production levels
should lead to supply and demand coming into balance
in 2006 reports a new study by Organic Monitor. Over
a third of the organic milk produced since 2001 has
gone into the non-organic market due to demand falling
short of supplies.
Organic milk supplies are falling in the UK due to
the decreasing number of organic dairy farmers. A significant
decline is predicted in 2005 when five-year conversion
grants to organic dairy farmers end and the EU derogation
on organic feeds is lifted. Organic livestock farmers
will have to use 100% organic rations after August 2005
and the rise in production costs is likely to cause
some to quit organic farming, the report says.
Organic Monitor forecasts the decrease in organic milk
production to not be matched by a slowdown in demand
for organic dairy products. Sales of organic dairy products
increased by 12.5% in 2003 and healthy growth rates
are envisaged in the coming years. Consumer demand is
expected to continue to remain robust in spite of higher
production costs raising retail prices in 2005.
High growth in the organic dairy products market is
being driven by product innovations and the marketing
efforts of producers. A number of innovative organic
dairy products have been launched in recent years, which
include flavoured organic milk and Greek-style organic
yoghurts. Scientific research into the health benefits
of organic milk and growing demand from food service
and catering companies are also expected to drive market
The organic milk and organic yoghurt segments are reporting
the highest growth. Organic yoghurt sales account for
7% of all yoghurt sales in the UK and the market share
is projected to rise to 12% by 2010. Organic milk sales
have shown rapid growth since they were introduced under
supermarket private labels. Sales of organic butter
and fresh cream are increasing at relatively lower rates.
The study found that consumer demand for organic dairy
products is widening. The re-positioning of organic
brands is driving this trend. Companies like Yeo Valley
Organic are adopting a brand strategy in which they
are targeting consumers who are seeking premium dairy
products. New organic dairy products are introduced
as part of the brand extension strategy and this is
expanding the organic dairy category.