Dominance of the supermarket own-label has hampered creativity in milk packaging. A growth spurt in alternative milk products and the arrival of extended shelf life technology may mean the milk market is on the turn for the better reports Louise Hunt
If ever there was a product sector in danger of paling into insignificance it’s milk. While its cheese, butter and yoghurt cousins are enjoying some lavish attention from brand managers and consequent boost in consumer interest, milk appears to be drowning in itself.
This is not entirely surprising. Although the UK is in the top four of EU milk consumption, sales of fresh and treated milk are in decline causing a 2% drop from 1996-2001 across the whole of the UK dairy sector, according to Pira International. There is currently a surplus of milk in the UK and this translates to lower retail prices than the rest of Europe at below the EU target price of 20.42p per litre.
Dairy farmers are being hit hard by the dairies which are undercutting each other to meet low price demands from the multiples, says the National Farmers Union. It costs a dairy farmer on average 19p to produce a litre of milk. They receive 16p per litre (DEFRA June 2002). Last September this imbalance led to a deal being struck between the NFU and retailers to raise the price of milk by 2p per litre on condition that the extra money went directly to producers. Negotiations are still under way.
Granted the plight of dairy farmers is not of pressing concern to packaging suppliers, but the way in which milk is sold in this country is putting a damper on opportunities for branding and new product development.
The dominance of the multiple’s and 80% decline in 20 years of the doorstep drop means that the majority of milk is sold as own-label and, according to figures from one of Europe’s largest dairy packaging suppliers, Elopak, the 4-6 pint market tops sales. Bulk buying means standard white milk truly is a commodity product and therefore not treated to the same marketing attention as other dairy products have come to receive.
“Milk is a loss leader,” says Elopak marketing manager Peter Barnes. “It is a good weekly purchase to get people into the stores to buy something else.”
A 2001 Key Note report into the strengths and weaknesses of dairy products notes that the commodity nature of milk and strong own-label penetration hinder value growth. The milk sector lacks significant innovation and brand advertising.
In mainland Europe, where most of Elopak’s milk dealings take place, there is greater opportunity for brand innovation says Mr Barnes. Retailers have had less control over grocery sales and there are fewer supermarket own-label products which means mainland European dairies are better able to develop milk brands.
The bleak UK picture is, of course, not the full story. A non-commodity milk sector is emerging to offer alternatives to bog standard milk.
Key Note, in its report, identified goat’s milk, organic milk and speciality milks as areas of opportunity.
Rachel’s Organic Dairy is a brand making the most of consumer demand to know where products come from and the ethics behind their production.
Launched in May 2002, Rachel’s Organic Milk was sold into Sainsbury, Tesco and Safeway, following a 10 000 home doorstep pilot. A 32% extra free promotion of 750ml organic milk for the price of 1pint is being rolled out in selected stores. The offer was made possible with the Tetra Top system that allows graphic reproduction on pack.
In the specialty milk category, Breakfast Milk from Highgrove Foods, is ensuring its premium milk from Jersey and Guernsey cows turns heads with a new pack design. Viscose Closures supplied an eight-colour gravure printed shrink-sleeve in 50-micron PVC featuring Harriet the Jersey cow. A transparent panel is incorporated to show milk levels.
Brand awareness is also being asserted by the big four UK dairies Express, Dairy Crest, Arla and Robert Wiseman.
Arguably one of the most prominent of these is the Robert Wiseman Dairies Black and White brand, with its distinctive Fresian patterned pack and green lettering.
For Wiseman, the independent market going into symbol retailers and contract supply makes up 15-20% of volume. Only one branded product – Fresh and Low – is sold into supermarkets in Scotland.
The dairy is building its brand personality and this month will roll out a TV commercial aimed at raising brand awareness in the South West says marketing manager Joanne Rae.
Milk To Go, a recent addition to the Wiseman range, is challenging traditional milk drinking occasions with the introduction of 250ml Tetra Pak cartons featuring a dome top and improved ring-pull mechanism that allows consumers to drink straight from the pack.
Wiseman also broke new ground in 2001 when it became the first dairy to adopt 360 deg polyethylene stretch-sleeve labels from ITW Auto-Sleeve as the exclusive bottle decoration for its new Droitwich Spa plant.
The glue-free labels were chosen for their 50% additional marketing capacity. The use of PE provides transparency levels not possible with paper or glued plastics, as well as offering greater graphics options than self-adhesive or paper labels.
Commenting on Wiseman’s introduction of the stretch-sleeves, Neil Clark, ITW’s director said: “Robert Wiseman appreciates these labels can be a powerful marketing tool, benefiting both its own brand and its customers.”
In the past year their introduction onto retailer own-label milks, including Tesco, was another first for Wiseman and may well set a labelling trend.
‘The White Stuff’ – a campaign between the Dairy Council and UK dairies to enhance milk appeal among schoolchildren – is also serving to unleash pent up creativity in school milk packaging.
Midland’s Co-op Dairies is casting off milk’s boring image with 189ml Tetra Brik cartons featuring cows in three cool guises.
Meanwhile, Elopak is helping Associated Co-operative Creameries to engage the 4-7 year old market with Mr Men and Little Miss characters and Beano and Bash Street Kids for the 7-10 age group. The 189ml Pure-Pak cartons feature two designs thanks to Elopak’s two-sided flexographic printing cylinder with alternative plates.
The most significant development in the milk sector has to be the advance of Extended Shelf Life (ESL) technology.
Developed over the last two decades, it is only in recent times that milk products are beginning to emerge offering the benefits of a purer taste and up to 40 days shelf life.
Based on a steam infusion system originally developed by APV in Denmark, ESL works by increasing or decreasing heat depending on the spore forma count. It is said to be a far gentler and accurate treatment than pasteurisation and UHT, able to raise high temperatures for a fraction of a second followed by a steep drop.
The delicate science of ESL technology is enabling Arla Foods to launch the first fresh flavoured milk products into the Danish market. With only UHT products previously available, the development is expected to fuel consumer trends away from carbonated and soft drinks, said to have seen a steady decline in recent years.
Elopak supplied its Pur-Lac ESL system with the three flavours packed into 320ml PE bottles from Schouw Packing.
Designed to reflect the traditional milk bottle shape, the opaque plastics also serves to protect milk from UV light which can deplete its nutritional benefits.
Along with claimed taste improvements, there are dramatic supply-chain changes that can be made. Leading UK goat’s milk supplier Delamere Dairies has been able to meet burgeoning customer demand by changing to a Tetra Pak ESL filler and long-life Tetra Rex gable top cartons.
Previously, supplies were quickly running out, leading to customer dissatisfaction. With its new longer shelf life of up to 21 days, Delamere was able to increase its presence in the market with improved availability.
Says Delamere managing director Liz Sutton: “Consumers can buy milk with sufficient life to permit once-a-week purchase without the need to freeze the milk. At the same time their confidence in product availability can grow.”
Purity and longer life have become an integral part of branding for Arla Foods’ Cravendale PurFiltre milk. Sold under the slogan ‘milk so good the cow’s come home’, PurFiltre is not ESL in the sense discussed above stresses communications director Peter Edwards.
The technology, licensed to Parmalat in Italy, is based on a series of filters said to eradicate 99.7% of bacteria, whereas conventional pasteurisation removes 97%. The claimed result is a better taste and 20-day shelf life.
Cravendale PurFiltre is packed in white PP bottles from Tetra Pak, complete with ITW-Auto-Sleeve stretch sleeve labels.
So why hasn’t ESL taken off in the predominant own-label market asks Peter Barnes?
“If the standard milk market went ESL it would mean retailers need only negotiate with one factory serving the entire country rather than several regional plants.
“Why is this not happening? Because the dairy has to invest in masses of new processing equipment and the retailer isn’t prepared to pay more.
“Retailers can get a better price from one factory than they can from four factories.
“They don’t want to go down that route because, in their heart of hearts, they don’t think the consumer wants longer shelf life. But Cravendale appears to be proving that theory wrong.
“The own-label milk market won’t change until retailers’ attitudes change. But, if the dairies have learnt anything from their experience, it will be to continue to build brand awareness – which they believe can be done with ESL technology – and stay very firm on price. But they can resist the retailer if brands stay strong on new product development .
“This, of course, depends on the dairies remaining strong by agreeing never to undercut each other on price and, instead, competing on product innovation and development alone.
“Now that just might prove to be a much better route.”