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Wednesday, 23 April 2014

Yoghurt in the United Kingdom UK


Yoghurt in the United Kingdom



Headlines

·         Yoghurt sales grow by 2% in 2008 to reach £1,353 million.
·         Pro/pre biotic spoonable yoghurt is the most dynamic category, with value sales increasing by 14%.
·         Other functional spoonable yoghurt sees the largest change in value sales growth, from 22% in 2007 to 12% in 2008.
·         Value sales increases in spoonable varieties are offset by ongoing declines in drinking yoghurt products.
·         Müller Dairy (UK) leads sales of yoghurt with a value share of 29% in 2007.
·         Value sales are predicted to increase at a CAGR of less than 1% over the forecast period.


Trends

·         There were several core trends within yoghurt during 2008. Health issues remain the largest and most significant driver of both sales and product development. However, yoghurt was also characterised by an inclination towards indulgence items. Key launches in this regard included the September 2008 introduction of Danone Ltd’s functional yoghurt dessert product Activia Intensely Creamy and the October 2008 launch of Rachel’s Dairy Ltd’s dessert-style Divine brand in milk chocolate, orange and toffee flavours.
·         Any value growth created by these trends in 2008 was offset by the ongoing decline within drinking yoghurt, value sales of which fell by -3% that year compared to a CAGR for the review period as a whole of 13%. There appears to be a certain amount of consumer resistance to the faddishness of these products; the -9% decline in sales of other functional drinking yoghurt suggests that consumer cynicism about its efficacy is rising. Greatly reduced levels of disposable consumer income also hurt sales; as recession began to bite in the UK, the frankly non-essential nature of functional products meant that consumers were quick to discard them. Both functional and non-functional varieties of yoghurt suffered from a proliferation of healthy (or at least positioned as healthy) alternatives such as smoothies and juices which became widely available during the review period. Manufacturers are not keen to give up on yoghurt however, and in March 2008 Unilever Foods UK Ltd invested £15 million into supporting its Flora Pro-activ brand.
·         Spoonable yoghurt therefore underpinned any positive overall value development, with growth driven primarily as a result of consumers perceiving ‘active’ products to be healthy; brands that saw the strongest growth were those that clearly communicated such a function. Danone Ltd’s Activia, for example, increased its value share from 3% at launch in 2002 to over 9% in 2007 by following this strategy, and through the growing perception that it can help to relieve the discomfort of feeling bloated.
·         Leading company Müller Dairy (UK) Ltd, on the other hand, saw the value share of its Müller brand slip during the review period as consumers perceived it to be sugary and not especially healthy. Nonetheless, the company witnessed sales growth in absolute terms during 2007 as a result of increased marketing. Its Crunch Corner brand enjoyed strong growth after having been aggressively promoted as an all-day snack. New product development has not been so successful; the Müller One a Day brand, launched in 2007, was abandoned the following year, and the company also discontinued Müller Light in 2007. Consumers apparently cannot associate this brand with healthy options, a fact which may partly be related to its livery, which makes it look like confectionery.
·         Product development in 2008 was therefore increasingly related to repositioning yoghurt away from its historical status as a kind of diet snack. This was achieved through new packaging designs, formats and varieties that were increasingly being segmented and that helped encourage consumption at all mealtimes. Squeezable yoghurt aimed towards children has been particularly successful, for example, and organic variants, led by Yeo Valley Organic Co Ltd’s Yeo Valley and Rachel’s Dairy Ltd’s Little Rachel’s Organic have also performed strongly. These products are often bought by parents of young children, whose price sensitivity is low when it comes to products for their infants. In general, consumer awareness of the ingredients contained in yoghurt is rising.
·         As a result the price positions of spoonable yoghurt products moved upwards, showing value sales growth of 4% in 2008 despite a marginal drop in volume terms. Within this category, functional varieties grew most strongly – in line with overall UK packaged food trends – with value sales of both functional spoonable yoghurt and pro/pre biotic spoonable yoghurt increasing by 14% in 2008.
·         Paradoxically, these products typically make the same claims as functional drinking yoghurt and pro/pre biotic drinking yoghurt, both of which experienced a decline in value sales that same year. The difference appears to reside in the clarity of marketing activity, since the blizzard of health claims made on behalf of brands such as Yakult seems to have confused people. Price rises have been partly driven by the increased costs of raw materials that have characterised dairy products as a whole, but mostly by production development efforts that have added value.


Competitive Landscape

·         Sales of yoghurt in the UK continue to be led by Müller Dairy (UK) Ltd, which held a 29% share of total value in 2007. The company’s Müller brand increased its share that year, following a series of annual declines, through a mixture of extensive promotional activity, typically buy-one-get-one-free offers in supermarkets/hypermarkets, and through repositioning as an all-day snack. Müller includes a number of sub-brands – Fruit Corner, Crunch Corner, Little Stars fromage frais, Amore Yogurt and Vitality – but brand equity has largely been built on the Corners format, whose square packaging and separate compartments for flavourings added to the yoghurt are highly distinctive.
·         However, the Corners format is beginning to look a little tired, and the indulgence factor that underpinned the brand on launch in 1986 has long been eclipsed; moreover, consumer perception seems to be that these products are not especially healthy, and Müller is unable to follow price positions upmarket. As a result, its value share within yoghurt dipped from 35% in 2001 to 29% in 2007. Nonetheless, the brand did regain some share in 2007, thanks to the aggressive marketing of Crunch Corner coupled with sustained advertising expenditure. Subsequently in August 2008, for example, the company launched the ‘Mix it your way’ campaign for its Müller Corners, part of an £8.5 million marketing spend for the brand family that year.
·         The most successful company strategies in 2008 were therefore related to simplicity. Müller Dairy (UK) Ltd abandoned its healthy Müller One a Day and Müller Light formats in order to focus on what it does best, and Danone Ltd toned down the health claims for its functional Activia brand to one that the product makes people feel less bloated. Confusion amongst consumers about good and bad bacteria inhibited sales of several functional drinking yoghurt varieties in 2008, and clarity in branding appears to be the way forward. At the same time, manufacturers which emphasised the quality of the product, the indulgence factor or an organic position also benefited; UK consumers eat only half the amount of yoghurt per head that those in neighbouring France do, and are looking to try new variations as consumption becomes more normalised.
·         Although yoghurt in the UK remains dominated by multinationals such as Müller Dairy (UK) Ltd and Danone Ltd, smaller local players are also emerging. UK manufacturers Yeo Valley and Rachel’s Dairy Ltd have benefited strongly from organic trends, with the former’s Yeo Valley Organic brand ranked fourth overall within yoghurt during 2007. Increased consumer interest in provenance is underpinning some of these trends – Müller Dairy (UK), for example, now emphasises on its website the fact that its products are made in Shropshire – as are the health trends that have generated strong growth in overall sales of yoghurt.
·         Pricing trends helped reduce the share of value sales accounted for by private label over the review period, as consumer expectations are that these items should be cheap. Private label also lags behind manufacturer brands in terms of the wide variety of product development that was seen in 2008, making it more difficult for these products to move their positioning upmarket.


Prospects

·         Value sales of yoghurt are expected to increase at a CAGR of less than 1% over the forecast period, with a CAGR in excess of 1% for spoonable yoghurt offset by a negative CAGR greater than -2% within drinking yoghurt. Although manufacturers are keen to turn around sales of the latter – the margins on these products are substantial, and the category’s development over the review period was expensive in terms of marketing activity – consumers are becoming increasingly dismissive of product efficacy, while their high prices and non-essential nature makes them a less likely purchase during times of recession.
·         Spoonable yoghurt, however, will see value sales develop as a result of an increasing number of consumers trading up to more expensive varieties; volume sales are expected to decline at a CAGR of -1% in comparison to value growth of 1% over the forecast period. This will be underpinned by continually emerging health trends, including live functional yoghurt, the growing popularity of organic products and a generalised perception among consumers that yoghurt is good for you.
·         Average unit sizes may decrease, however, despite growth in the use of yoghurt as a cooking ingredient and its sale in large pots. Health-aware consumers also understand that these items are high in fat content and that small amounts are all that is needed. The emergence of indulgence products such as Danone Ltd’s Activia Intensely Creamy will also drive this sizing trend, as will the anticipated emergence of more child-specific variants; products such as Nestlé UK Ltd’s Munch Bunch Squashums, Yeo Valley Organic Co Ltd’s Yeo Valley Organic and Fruit Tumbles, and Dairy Crest Plc’s Frubes are already available, and more are expected to follow.
·         Per capita consumption in the UK still lags behind that across the rest of Europe, so manufacturers see growth potential in encouraging breakfast consumption and also through developing yoghurt as a healthy on-the-go snacking option. Yoghurt products with disposable spoons are likely to appear on convenience store shelves in the future, but may struggle to secure consumer uptake or indeed to obtain retail listings due to the current focus on the environmental effects of packaging waste. However, manufacturers are keen to find a niche within yoghurt that has not yet become saturated.
·         Health issues remain the biggest threat to the forecast growth of yoghurt sales. Even functional products have a relatively high sugar content, and the strong media focus on obesity in 2008, especially among children, could be turned against products such as yoghurt that are promoted as being healthy but which in fact may not be.


Sector Data



                                                                       2003               2004               2005               2006               2007               2008

Drinking yoghurt                                          35.4                54.2                69.7                64.5                63.2                60.0
    (million litres)                                                                                                                                                                          
Spoonable Yoghurt ('000                         390.3              392.2              417.9              425.8              429.0              427.9
    tonnes)                                                                                                                                                                                     
Yoghurt (not calculable)                                    -                       -                       -                       -                       -                       -
Source:           Official statistics, trade associations, trade press, company research, store checks, trade interviews, Euromonitor International estimates



£ million
                                                                       2003               2004               2005               2006               2007               2008

Drinking yoghurt                                        145.8              226.9              321.5              293.3              281.6              271.9
Spoonable Yoghurt                                   818.4              890.7              967.5          1,012.2          1,044.1          1,080.7
Yoghurt                                                        964.2          1,117.6          1,289.0          1,305.5          1,325.7          1,352.6
Source:           Official statistics, trade associations, trade press, company research, store checks, trade interviews, Euromonitor International estimates



% volume growth
                                                                                                             2007/08        2003-08 CAGR       2003/08 TOTAL

Drinking yoghurt                                                                                       -5.0                            11.2                            69.8
Spoonable Yoghurt                                                                                  -0.3                              1.9                              9.6
Yoghurt                                                                                                             -                                   -                                   -
Source:           Official statistics, trade associations, trade press, company research, store checks, trade interviews, Euromonitor International estimates



% current value growth
                                                                                                             2007/08        2003-08 CAGR       2003/08 TOTAL

Drinking yoghurt                                                                                       -3.4                            13.3                            86.5
Spoonable Yoghurt                                                                                   3.5                              5.7                            32.0
Yoghurt                                                                                                        2.0                              7.0                            40.3
Source:           Official statistics, trade associations, trade press, company research, store checks, trade interviews, Euromonitor International estimates



% value analysis
                                                                                                        Soy-based              Dairy-based                           Total

Yoghurt                                                                                                        0.5                            99.5                          100.0
Source:           Official statistics, trade associations, trade press, company research, store checks, trade interviews, Euromonitor International estimates



ranking
                                                                                               2004               2005               2006               2007               2008

Strawberry                                                                                  1                      1                      1                      1                      1
Cherry                                                                                         2                      2                      2                      2                      2
Mixed fruits                                                                                 3                      3                      3                      3                      3
Raspberry                                                                                   5                      5                      5                      6                      4
Fruits of the forest                                                                     4                      4                      4                      4                      5
Peach                                                                                          6                      6                      6                      5                      6
Apricot                                                                                         7                      7                      7                      7                      7
Orange                                                                                        8                      8                      8                      8                      8
Source:           Official statistics, trade associations, trade press, company research, store checks, trade interviews, Euromonitor International estimates



ranking
                                                                                               2004               2005               2006               2007               2008

Toffee                                                                                          1                      1                      1                      1                      1
Hazelnut                                                                                     2                      2                      2                      2                      2
Source:           Official statistics, trade associations, trade press, company research, store checks, trade interviews, Euromonitor International estimates



% retail value rsp
Company                                                                             2003               2004               2005               2006               2007

Müller Dairy (UK) Ltd                                                          32.5                30.7                30.6                28.8                29.4
Danone Ltd                                                                           12.4                14.7                17.0                19.6                21.1
Yoplait Dairy Crest                                                                 7.5                  7.5                  9.8                10.6                10.5
Yeo Valley Organic Co Ltd                                                   3.6                  4.5                  4.3                  5.6                  5.4
Lactalis Nestlé                                                                            -                       -                       -                  3.5                  2.9
    Produits Frais                                                                                                                                                                          
Onken Dairy (UK) Ltd                                                            3.3                  3.0                  2.6                  2.5                  2.7
McNeil Consumer                                                                 0.5                  1.4                  2.6                  2.6                  2.5
    Nutritionals UK Ltd                                                                                                                                                                 
Yakult UK Ltd                                                                          3.1                  2.9                  2.4                  1.9                  1.9
Unilever Foods UK Ltd                                                              -                  0.4                  2.0                  2.2                  1.6
Rachel's Dairy Ltd                                                                  0.7                  1.0                  1.2                  1.3                  1.6
Nestlé UK Ltd                                                                         7.7                  6.8                  6.1                  1.7                  1.5
Gorden Conrad Ltd                                                               1.4                  1.3                  1.2                  1.2                  1.3
Innocent Ltd                                                                            0.1                  0.1                  0.1                  0.1                  0.1
Uniq Plc                                                                                   0.7                  0.6                  0.2                  0.1                       -
Friesland Drinks NV/SA                                                        0.4                  0.4                  0.2                       -                       -
Ocean Spray Int Inc                                                                   -                  0.1                  0.2                       -                       -
ND Drinks UK Ltd                                                                  0.3                  0.0                       -                       -                       -
Arla Foods Plc                                                                        0.1                       -                       -                       -                       -
Northern Foods Plc                                                                    -                       -                       -                       -                       -
Private Label                                                                        17.0                15.8                14.2                13.8                12.9
Others                                                                                      8.5                  8.9                  5.4                  4.5                  4.6
Total                                                                                     100.0              100.0              100.0              100.0              100.0
Source:           Trade associations, Trade press, Company research, Trade interviews, Euromonitor International estimates



% retail value rsp
Brand                                             Company                                             2004               2005               2006               2007

Müller                                             Müller Dairy (UK) Ltd                          30.7                30.6                28.8                29.4
Activia                                            Danone Ltd                                             2.8                  3.9                  7.6                  9.3
Actimel                                          Danone Ltd                                             8.3                  9.7                  8.3                  8.2
Yeo Valley                                     Yeo Valley Organic Co Ltd                   4.5                  4.3                  5.6                  5.4
Yoplait                                            Yoplait Dairy Crest                                 1.2                  3.7                  4.0                  4.1
Weight Watchers                         Yoplait Dairy Crest                                 3.8                  3.8                  4.1                  3.9
Shape                                            Danone Ltd                                             3.6                  2.9                  3.3                  3.5
Biopot                                            Onken Dairy (UK) Ltd                            3.0                  2.6                  2.5                  2.7
Ski                                                  Lactalis Nestlé                                            -                       -                  2.9                  2.7
                                                        Produits Frais                                                                                                                      
Benecol                                         McNeil Consumer                                 1.4                  2.6                  2.6                  2.5
                                                        Nutritionals UK Ltd                                                                                                             
Yakult                                             Yakult UK Ltd                                          2.9                  2.4                  1.9                  1.9
Flora                                               Unilever Foods UK Ltd                         0.4                  2.0                  2.2                  1.6
Rachel's                                         Rachel's Dairy Ltd                                  1.0                  1.2                  1.2                  1.5
Total                                               Gorden Conrad Ltd                               1.3                  1.2                  1.2                  1.3
Sveltesse                                      Nestlé UK Ltd                                         0.8                  0.8                  0.8                  0.8
Munch Bunch                               Nestlé UK Ltd                                         1.4                  1.8                  0.9                  0.7
Munch Bunch                               Lactalis Nestlé                                            -                       -                  0.5                  0.2
                                                        Produits Frais                                                                                                                      
Petit Filous                                    Yoplait Dairy Crest                                     -                  0.0                  0.2                  0.1
Innocent                                        Innocent Ltd                                            0.1                  0.1                  0.1                  0.1
Little Rachel's                               Rachel's Dairy Ltd                                      -                       -                  0.1                  0.1
    Organic                                                                                                                                                                                     
Danacol                                         Danone Ltd                                             0.0                  0.5                  0.4                  0.1
Tweenies                                      Uniq Plc                                                   0.5                  0.2                  0.1                       -
Ski                                                  Nestlé UK Ltd                                         4.6                  3.5                       -                       -
Fristi                                               Friesland Drinks NV/SA                        0.4                  0.2                       -                       -
Ocean Spray                                Ocean Spray Int Inc                               0.1                  0.2                       -                       -
Teletubbies                                   Uniq Plc                                                   0.0                       -                       -                       -
Drinkfit                                           ND Drinks UK Ltd                                  0.0                       -                       -                       -
Bob the Builder                            Arla Foods Plc                                            -                       -                       -                       -
Nestlé                                            Nestlé UK Ltd                                              -                       -                       -                       -
Shape                                            Uniq Plc                                                       -                       -                       -                       -
Private label                                 Private Label                                        15.8                14.2                13.8                12.9
Others                                                                                                            11.5                  7.7                  6.8                  7.0
Total                                                                                                             100.0              100.0              100.0              100.0
Source:           Trade associations, Trade press, Company research, Trade interviews, Euromonitor International estimates



                                                                       2008               2009               2010               2011               2012               2013

Drinking yoghurt                                          60.0                57.0                54.6                52.5                50.8                49.5
    (million litres)                                                                                                                                                                          
Spoonable Yoghurt ('000                         427.9              417.1              410.8              406.3              404.1              403.4
    tonnes)                                                                                                                                                                                     
Yoghurt (not calculable)                                    -                       -                       -                       -                       -                       -
Source:           Official statistics, trade associations, trade press, company research, trade interviews, Euromonitor International estimates



£ million
                                                                       2008               2009               2010               2011               2012               2013

Drinking yoghurt                                        271.9              262.3              255.1              249.1              244.4              240.9
Spoonable Yoghurt                               1,080.7          1,093.1          1,107.9          1,121.8          1,136.3          1,150.5
Yoghurt                                                    1,352.6          1,355.4          1,363.0          1,370.8          1,380.7          1,391.3
Source:           Official statistics, trade associations, trade press, company research, trade interviews, Euromonitor International estimates



% volume growth
                                                                                                             2012/13        2008-13 CAGR       2008/13 TOTAL

Drinking yoghurt                                                                                       -2.6                             -3.8                           -17.6
Spoonable Yoghurt                                                                                  -0.2                             -1.2                             -5.7
Yoghurt                                                                                                             -                                   -                                   -
Source:           Official statistics, trade associations, trade press, company research, trade interviews, Euromonitor International estimates



% constant value growth
                                                                                                            2008-13 CAGR                                 2008/13 TOTAL

Drinking yoghurt                                                                                                   -2.4                                                     -11.4
Spoonable Yoghurt                                                                                               1.3                                                        6.5
Yoghurt                                                                                                                    0.6                                                        2.9
Source:           Official statistics, trade associations, trade press, company research, trade interviews, Euromonitor International estimates


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