DAIRY SENTIMENT TURNS SOUR
New consumer tastes could hit milk sales: Samantha McCaughren,
IF AMERICAN healthy eating and drinking trends are anything to go by, the Irish dairy industry may be feeling a little unsettled at the moment. Earlier this month, Dean Foods announced it was entering Chapter 11 bankruptcy. The company was established in 1925 by Samuel E Dean Jr in Illinois, at a time when milkmen did their morning rounds to make sure Americans had their dairy fix first thing.
However, the experience of Dean
Foods, which had become the largest milk company in the US, is now being seen as a warning sign for the wider dairy sector.
Although Dean Foods was struggling with debt and other issues, the US media and analysts alike are putting the blame on changing consumer habits.
“A milk giant goes broke as Americans reject old staples” was the headline in the New York Times.
The rise of almond milk and other alternatives seems to be eating into the popularity of dairy, with alternatives now accounting for 12pc of global milk sales, according to Euromonitor figures.
Irish milk consumption figures seem relatively stable — on the face of it, at least.
In 1996, some 536 million litres of milk were consumed in Ireland, and that number was 579 million litres last year, according to figures from the National
Milk Agency. However, the population has grown significantly since then, which is not reflected in milk sales.
In 1996, the population was 3.6 million. Now that number is 4.8 million.
This would suggest that annual consumption per capita in Ireland was 160 litres in 1996, and that it is down to almost 120 litres now.
This is the highest per capita consumption of milk in the world. But it represents a 25pc fall in less than 25 years.
Consumption actually peaked in 2015 at 601 million litres but has been on the decline every year since then.
Ciaran Fitzgerald, an agri and food economist, said that non-dairy milks were having some impact.
“What you do see is that they are stuck into fridges to try and pretend they are milk, even though they are not,” he said.
However, Fitzgerald believes that natural milk consumption is holding up relatively well, with semi-skimmed products and enriched milks, such as
Super Milk, growing in popularity as fullfat milk loses favour.
Whole milk represents 61pc of fresh milk sales, while sales of low-fat and skimmed milk make up the rest.
The National Dairy Council has done a great job in promoting milk in Ireland — milk-producing countries are typically very active in promoting the products in their home markets.
One of the key points the council tries to get across is the nutritional benefits of milk brands compared with nondairy products, which are sometimes predominantly a water-based liquid.
However, perhaps the real danger lurking in the background for milk is the shift to own-label, whereby the likes of Tesco and Dunnes sell milk under their own brands.
Own-label now accounts for 70pc of milk sales in Ireland.
Notwithstanding the fact that much of this own-label milk comes from Northern Ireland, the main problem with the development is that the future of most of Ireland’s milk products now lies in the hands of large supermarket chains. “The business now combatting non-dairy milks is a supermarket,” Fitzgerald said.
“They have a supermarket shelf and are indifferent as to what sits on it. The increase in own-label is a threat, as I would see it.”
In essence, the dairy industry is now in a weaker position to fight for its place in shop fridges at a time when it may most need to.
Almond, coconut and soy milk may not have taken hold here the way they have in the US, for now at least. Indeed, there has been a rising tide of concern as to just how good an environmental alternative nondairy milks are to the real thing.
But according to a Guardian article last year, it takes 6,098 litres of water to produce 1 litre of almond milk, which obviously has its own sustainability implications.
Irish dairy farmers can take solace from the fact that only 6pc of milk supplies are processed for liquid consumption in the domestic market.
But as Dean Foods has found, milk is no longer pride of place in many fridges — both at home and in supermarkets — and it is difficult to see it ever being the staple it once was in Irish diets.