Making Milk Cool Again: Milk Is in an era of Flux, Premiumization, and Self-Discovery

Fluid milk companies in developed markets are on the back foot with demand falling in North America and western Europe over the last 10 years, as broadly speaking, conventional milk has failed to reinvent itself. In developing markets, milk’s nutritional value is of utmost importance.

Despite its declining popularity in the US, milk remains a pivotal product for retailers as grocery shoppers who buy milk tend to buy significantly more groceries in general than those who don’t. As such, milk is a focus for online retailers who have struggled to attract grocery shoppers. Retailer pricing wars, high rates of private label sales, falling sales, and growing competition from new dairy based and non-dairy based milks have reduced margins, making it tough for fresh fluid milk companies to rationalize investments in marketing and innovation, which is what it will take to turn the tide.

 

 

The challenges milk currently faces are forcing an era of flux and self-discovery, driving innovation and development. Investors are getting involved, realizing the depth of potential in the category despite current challenges. A word of caution for investors, however. Margins are thin, and only the most efficient and those with serious differentiation and branding can stay afloat. The good old days of high margin bulk milk are long gone, but there are opportunities for the bold, for UHT milks in developing markets, and for premium differentiated milks earmarked with sustainability and quality in developed markets.

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