The UK milk market is now worth £3.2 billion, an increase of 21% from 2003. Increasing supply-driven costs, rather than strong volume sales increase or premiumisation, is driving value growth in the market. Milk is still perceived by consumers as a commodity, and consumers do not feel that premium products are worth paying more for. Going forward, talking up the health benefits and the provenance of milk will be critical to justify milk’s market differentiating benefits.

This report examines the UK market for milk and cream, including products sold via doorstep delivery as well as through retail outlets. Sales of milk within the catering and industrial sectors, as well as welfare milk supplies, unless otherwise stated, are excluded.

Categories included for the purpose of definition are:

• liquid milk including pasteurised whole milk (also known as full-fat milk), skimmed and semi-skimmed milk, homogenised, sterilised, breakfast milk, organic milk, soya and goat’s and sheep's milk
• dry milk powders such as Marvel and non-dairy creamers such as Coffee-mate
• flavoured milk drinks and milkshakes (eg FRijj)
• milk modifiers (eg Nesquik)
• evaporated and condensed milk products
• alternative milk products (such as dairy-free soya beverages)
• real cream, which covers half, single, double, whipping, clotted, soured cream and crème fraξche
• UHT (including aerosol)
• cream alternatives, such as Elmlea and Delight.

• Rising costs of production is resulting in increasing retail prices.
• Milk’s perception is as a commodity by consumers and there is reluctance to trade up.
• Massive opportunity to talk up the product’s health benefits.
• Greater need for more distinct points of difference to generate a product premium.