The fresh food and dairy categories are benefiting from increasing consumer awareness of health and natural ingredients. Asian Trader finds out how independent retailers can capitalise.
British consumers show their love for dairy every day. If any evidence were needed to prove that, then the fact that 96% of adults buy milk should be proof enough.
Hot on the heels of milk comes great British cheese. The high-quality cheeses produced in the UK find their way into the fridges of 94% of British adults. Cheddar remains the country’s favourite, accounting for just over half of all nationwide cheese sales.
A huge majority of adults – 78% – eat spoonable yogurt or fromage frais, with more than half of them doing so twice a week or more.
Little surprise then, that Defra’s Family Food statistics show that purchases of milk, cheese and yogurt all increased in 2017.
A number of trends such as the growth of a healthy snacking culture, higher food consumption outside of the home and the growth of online and mobile shopping are changing the way food is being bought and consumed.
Dairy is at the forefront of these trends as a convenient and relatively cheap source of protein. Retailers must adapt to these trends through better use of technology and data to target customers with tailored offers and ensure that they can match supply and demand in smaller stores through better inventory management.
Sales of fresh fruit, salad and vegetables, have increased by approx. £15 million over the last year. Figures also show that the chilled convenience sector, including tofu and fresh vegetarian products, grew by over 25% in value.
In an exclusive interview with Asian Trader, Wayne Thompson, Customer Marketing Manager for Yazoo at Friesland Campina UK comments: “In terms of consumer trends, seasonality is a big one. If the weather picks up, consumers look to chilled food and drink rather than hot. Chilled milk is a perfect refreshing drink on a hot day. It is a taste led category.”
Friesland Campina launched limited edition chocolate mint last year and this year is launching limited edition chocolate caramel. “These are tried and tested flavours which we are bringing to market,” adds Thompson. “Caramel is an overarching trend across different categories like coffee. Health is high on the consumer agenda and retailers need to keep that high in mind.”
There are many health benefits of flavoured milk including vitamin B12 and calcium.
While the sugar levy has been in place since last year, flavoured milk is outside the levy because of its nutritional benefits. “Consumers have looked around for choice,” says Thompson. “Price is not the decider but it helps disrupt the shopping habits.”
Thompson shares a statistic which says 15% of soft drinks shoppers have switched to flavoured milk since the introduction of the levy.
“Independents’ competitive edge over the multiples is their convenience,” Thompson comments. “More people are shopping more frequently. Basket sizes are going down but frequency of shopping visits is increasing.”
Independents are perfectly placed to capitalise on this trend. 89% of Yazoo sales are from the top four flavours. 30% of shoppers visiting the store are going in for the distress top-up shop.
“Within the independent channel there has been a surge in purchases of PMPs,” Thompson adds. “10 to 15 years ago the price perception was high in independents. PMPs give consumers confidence that they are not being ripped off. If I was advising independents I would say make sure you are stocking PMPs.”
The 400ml format of Yazoo works best, according to Thompson, as 18-24 year olds love flavour and taste. The £1 PMP is popular, with the rate of sale on PMPs having doubled compared to standard packs.
Yazoo 400ml is an on the go product. “We suggest retailers merchandise it in the soft drinks fixture,” says Thompson. “That is really the place to maximise sales. It is always key to place the best sellers at eye level.”
A secondary location is in the chiller with milk based products. Friesland Campina offers support where we can with chiller trays and wobblers to disrupt the shopper mission, working with convenience retailers to do promote the health benefits of flavoured milk.
“Consumers go to the soft drinks fixture for the food-to-go occasion so retailers can offer flavoured milk as one of three items in a meal deal, alongside sandwiches or Rustlers, etc,” adds Thompson.
86% of sales of the 400ml variant in the convenience are driven by the PMP format. New flavours work well, with Chocolate Mint, launched last year, becoming a £1m flavour in five months. Friesland Campina aims to do the same with Caramel.
The UK dairy sector is worth £10 billion – outperforming most other areas of grocery, according to Kantar Worldpanel. In 2017, Brits spent an extra £41.7m on yogurts alone, however the overall growth was driven by a 2.9% increase in average prices, while the volume fell 0.3% year on year (Kantar 52w/3rd December 2017).
However, in a declining market with a large number of the big players suffering loss of sales, Lancashire Farm Dairies has grown by 96% in the last three years.
“We put this down to three main things: firstly, a large number of key convenience listings and distribution gains secured in the last 12 months,” says Azhar Zouq, Managing Director of Lancashire Farm Dairies. “Secondly, formats are playing a huge part in the sales boost as the ongoing change in consumer attitudes towards yogurt sees shoppers turning to yogurt as an everyday ingredient for a number of meal occasions.”
Lastly, the launch of free range yogurts has also made its mark on sales as sustainable farming and animal welfare have become increasingly important, according to Zouq.
“While convenience stores have often shied away from expanding their chilled range due to worries around wastage, by tapping into the changing consumer mind-set and offering a product range that meets these needs, there is real opportunity for growth in an overall contracting market,” adds Zouq.
Natural, healthy, high in protein yet indulgent nutrition are key trends in dairy innovation. Over the past few years, dairy businesses have focused their efforts on removing artificial additives and reducing sugar content, as consumers are turning to cleaner labels. Indeed, 86% of consumers are more likely to purchase products that contain less ingredients, according to a 2018 Trend Report by Innova Market Research.
Thus, we are continuing to see strong growth in sales of natural and Greek yogurt as consumers are keeping an eye on healthy eating and meal prep trends fronted by social media influencers and health bloggers. Rather than going for a flavoured yogurt, shoppers are using natural yogurt as a base to add their own toppings, such as different fruits, oats, nuts and seeds to create a range of tasty meals throughout the week. In addition, there are a significant number of consumers who also opt for full-fat products as part of a balanced diet, or use it to substitute other products like mayonnaise, cream and cheese.
Consumers are also moving towards a ‘buy less, more often’ approach, yet are still expecting the same variety of formats traditionally found in the larger supermarket on their doorstep, which has created an opportunity for big pots (450g and above) to capitalise on. As consumer purchases are becoming more trend-led, product positioning is more important than ever. Yogurt is no longer seen as a one-occasion product and is being used regularly as a snack or as part of a recipe. This gives retailers the opportunity to push the larger pack format which is ideally suited to meet this range of needs.
“Stocking the larger pots allows retailers to cross-merchandise with other ingredients to offer their customers meal ideas, such as the new ‘overnight oats’ trend, which would also encourage the sale of accompanying ingredients,” comments Zouq. “Also, buying one larger pot instead of two or three smaller pots offers consumers greater value for money. We have seen great success in the Lancashire Farm Dairies 1kg line as families are becoming more adventurous and continuing to find new and tasty uses for the yogurt.”
Often shoppers are mission led, especially when you consider many independent retailers are convenience and impulse led. As such, providing customers with a clear mission and range, both within the dairy fixture and beyond, is critical. Natural yogurt is all about application and shoppers are finding new and exciting ways to create snacks and meal options. Customers focussing on health and well-being may well look to fruit and cereals to service their need, likewise the avid baker may be looking for items within a baking section. Not only does this deliver a higher total basket spend but also builds trust and helps ensure they return for their next mission.