Milk retailing sector trends

(last updated July 2019)

What has been happening in the milk retailing sector

In recent years there has been:

  • a gradual fall in milk consumption because of changing lifestyles and eating habits, although consumption seems to have stabilised now
  • a big increase in the number of different types of outlet selling milk
  • significant price discounting of milk by supermarkets. This became even more intense during the mid-2010s as the supermarkets faced increasing competition from the discounters like Aldi and Lidl
  • a huge fall in demand for doorstep deliveries of milk and the virtual disappearance of glass bottles - although concern about the impact of the use of plastic packaging on the environment has seen a small reversal of this trend
  • increased regulation of the food sector and the introduction of food legislation. This affects the way in which retail dairies can operate

In 2006 the Healthy Start Scheme replaced the Welfare Food Scheme. Under the Healthy Start Scheme school children under five are entitled to free milk at school and lower income families are given vouchers for milk, fruit and vegetables, including frozen fruit and vegetables. If you decide to provide milk to schools or accept these vouchers you will be repaid by the Healthy Start Reimbursement Unit. Visit the Healthy Start website for information on how to register as a supplier.

In 1980 doorstep deliveries accounted for 89% of household purchases of milk. This fell to 45% by 1995 and by the 2010s it had fallen to 3% for the whole of Great Britain. The decline has been accompanied by a growing price differential between delivered milk and milk purchased from retailers. For example, in 1995 the average price of a pint of milk delivered to the doorstep was 37.9p and 23.9p if purchased from a retailer. The differential by the late 2010s was 81p for a delivered pint and 28p for a pint purchased from a retailer. Although the rise in home delivered groceries and other items in the 2010s has led to something of a recovery in the demand for doorstep deliveries of milk (doorstep deliveries increased from 800,000 in 2016 to 1 million in 2018), you will have to decide whether:

  • demand will be high enough in your area to support your proposed business. If you plan to locate in a rural area, there simply may not be enough customers, unless you are aiming at a seasonal, tourist market
  • the people living in your area will want their milk delivered - many commuters prefer to pick up the milk with the weekly shop. Are there other goods that you could deliver alongside the milk order, for example yoghurts, fruit juices, bread, fruit, vegetables and so on?
  • there is already too much competition in your area from other roundsmen and retail outlets

The demand for doorstep deliveries is driven by the convenience it offers to consumers. So many people are time-poor because of the busy, pressured lives they lead that the convenience of delivered milk, together with other innovative services and products, may present opportunities for doorstep deliveries in the future.

Keep up to date with the milk retailing sector

Dairy UK Ltd represents the interests of those operating in the milk sector and produces a variety of publications to help milk retailers keep up with developments. It also helps to market the doorstep delivery service to consumers through its 'Find Me a Milkman' website. Contact Dairy UK at 210 High Holborn, London WC1V 7EP or visit the website.

The Dairy Council supports the whole dairy sector and aims to promote consumption of milk and dairy products. The Council is funded by Dairy UK and you can contact them at the Dairy UK address or visit their website.

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