|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 growth.
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