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NDC: Milk & Dairy Shows Resilience in Face of Recession
2009 A Year of Turbulence - But Also a Year of Major Milestones

"2009 was a difficult year for the grocery sector – but within this, milk and dairy products succeeded in sustaining or even improving volume,” said Helen Brophy, Chief Executive of the National Dairy Council, speaking at the launch of the NDC Annual Review.

Overall in 2009 total volume of milk sales was up 1% on 2008, with corresponding sales value showing a decline of 4.9% (excluding independent and doorstep sales).
The total volume of butter and spreads grew marginally. Sales of butter declined 2% but returned to a positive position by the end of the year – by contrast the sales value of branded health spreads fell by 11% reflecting increased promotional and reduced price activity. The cheese category grew marginally in volume over the year with the value of the cheese category falling by 5.2%.

A trend towards home cooking is reflected in the sales of cream which, (excluding doorstep and independent sale figures) grew in volume by 4.9% in 2009, with a positive increase in sales of 1.2%. In volume terms, yogurt was the exception within the dairy category, recording a 3.4% decrease in volume in the first half of 2009 which reduced to 0.4% by the end of the year.

“Price deflation was a feature of 2009. According to the CSO, the overall price fall for all food was 7.8%. By comparison, in this difficult climate, dairy held its value better than many other categories,” said Ms. Brophy.

“The dairy sector was operating in a grocery market last year which was under pressure from retailers in their battle for market share; as well as consumers who were searching for value,” said Ms. Brophy. “The dairy sector has worked hard and shown its resilience, with the result that consumers continue to enjoy milk and dairy products, whilst being more discerning about what they choose.”

Recession Shifts Shopping Patterns & Consumer Focus

“The shock of recession caused many Irish consumers to radically change their shopping patterns at the start of 2009,” explained Ms. Brophy. “According to Nielsen, the Republic of Ireland’s decline in spend on fast-moving consumer goods (FMCG) during 2009 was one of the most severe recorded in Europe.”

The consumer focus shifted to value – such as larger pack formats or extra filled promotional packs. Growth of private label (PL) overall was a trend in the food/grocery sector in 2009, with total private label share within multiples reaching 19% by the end of the year. In the dairy retail market, private label grew in volume in multiples from 24.9% to 27.5%.

The double digit growth experienced by the multiples in Northern Ireland came at the expense of the 8% decline experienced by the supermarket chains in the Republic of Ireland.

In the Republic of Ireland, the discounters (Aldi/Lidl) were the clear winners in the battle for market share in 2009, with their retail grocery market share growing from 9.6% to 11.8% by the end of 2009. The symbol or franchise groups and forecourts experienced a decline from 28.2% to 25% last year whilst the multiples, who started the year at 62.2% share, fought hard to grow this to 63.3% by the end of 2009.

“The ‘flight to value’ by consumer did rebalance as the year progressed and we believe consumers have largely adjusted their shopping patterns at this stage. The small increase in consumer confidence in the second half of 2009 gives us a glimmer of optimism,” said Helen Brophy. “It is clear that the bottom line is not always price. Consumers here are actively looking to buy local and environmentally friendly products, with 25% willing to pay more for them and trends increasing as 2009 progressed.”

A Year of Turbulence & Major Milestones

In the context of domestic milk prices for farmers, which are intrinsically linked to the global market, it has been a turbulent year for our dairy sector. However speaking at the NDC Annual Review briefing, NDC Chairman Dominic Cronin said that despite this, 2009 was a successful year for the National Dairy Council where targets were met and, in many cases, surpassed.

“In 2009 the NDC again demonstrated its ability to be highly impactful in its various programmes which work with diverse audiences – ranging from consumers to health care professionals, to schoolchildren or dairy farmers,” said Dominic Cronin.

“The launch of the National Dairy Council trade mark – Farmed in the Republic of Ireland – should be singled out,” said Mr. Cronin. “The NDC mark brings much needed clarity to consumers in the Republic of Ireland about where their milk has been both farmed and processed.”

An extensive NDC advertising campaign started in November 2009 to coincide with the roll out of the trade mark on milk and cream packaging, with some 340 packs now carrying the mark including both branded and private label produce farmed and processed in the Republic of Ireland. Personalities involved in the campaign included George Hook, Micheál Ó Muircheartaigh, Mary Kennedy and Paul O’Connell.

Speaking at the NDC Annual Review briefing, Barry Jones, Managing Director of BMR (Business & Market Research), described the NDC mark as more than an icon printed on milk or cream cartons. “The mark has an ideal which means something in the hearts of consumers.”

Mr. Jones presented the results of consumer research into the NDC mark and its advertising campaign undertaken in January 2010, showing strong consumer awareness and a campaign which is more than meeting its objectives in a relatively short space of time:

• 68% had seen the TV ad a few times or more, whilst 72% commented favourably about it.
• 80% agree the ad informs people about the existence of the NDC mark.
• 82% believe the advertising asks them to look out for the NDC mark when buying milk.
• 79% believe the NDC advertising explains that the NDC mark means supporting our local dairy farmers and dairies in the Republic of Ireland.
• 55% stated that milk with the NDC mark is now either the only milk they would consider, or the milk they would look out for first.

In January 2010, 100% of the dairies participating in the NDC trade mark initiative, confirmed that their retail customers were fully aware of the NDC mark whilst 80% have had retail customers specifically ask for the mark or who have included the NDC mark in tender requirements. Despite the fact that the ad campaign was focused at consumer/retail level, 70% of participating dairies say that customers in the catering/ restaurant trade are aware of the NDC mark. All of the participating co-ops believe the NDC mark is a worthwhile initiative.

“The strong results show the role the NDC can play in co-operation with its industry partners in helping to ensure the continued livelihoods of our farm families and co-op employees with such initiatives as the packaging mark,” said NDC Chief Executive Helen Brophy. “Given the strength of the supporting research, the NDC will commit to further support to continue the NDC trade mark campaign into 2010.”

Action & Progress

In 2009 the NDC expanded use of its nutritional expertise with the establishment of a Scientific, Nutrition and Technical Committee, the development of a newsletter for some 4,700 health professionals, health advisory literature for members of the public, the provision of science-based evidence on the role of dairy, the continuation of the Dairy Den information programme for mothers and a number of Health and Wellbeing events held in different regions.

The year has seen extensive programme activity ranging from the launch of the NDC Quality Milk Awards, to the development and nurturing of strategic partnerships, for instance with counterparts in Great Britain or the Irish Osteoporosis Society. There was further development of marketing resources such as Segmentation Tools and a ‘National Dairy Week’ initiative.

A revitalised School Milk & Dairy Programme launched in April 2009 saw the introduction of a new ‘Fresh Milk Club’. Supported by resources such as NDC School Milk fridges and cooler bags and strengthened by a partnership with the FAI, the programme involved visits to 500 national schools in 2009 with figures showing an increase in pupil participation in the School Milk Scheme in these schools of 48% between September-December 2009.

Milk in Action – A Positive Start to 2010

2010 starts on a positive note, with news in December that a new three year campaign to promote the nutritional benefits and consumption of dairy was approved for EU co-funding. The NDC and its Chief Executive Helen Brophy, will be responsible for overall management of the project, “Milk in Action.”

A prerequisite to the EU co-financing was that the industry in the Republic of Ireland, through NDC members, will fund 30% of the campaign costs. 20% of funding is coming from the Member State and 50% from the EU. The NDC Milk in Action campaign will receive, over 3 years, €728,470 funding from the EU; €291,388 from the Department of Agriculture, Fisheries & Food (approximately €100,000 a year); and, over three years, €437,082 raised by the industry through NDC members in the Republic of Ireland.

The programme will complement the existing NDC activities and is scheduled to commence in April 2010. It aims to increase consumption of milk and dairy products in specific target groups of 11-20 year olds through an association with sport; and young women particularly aged 20-35 with a focus on the nutritional benefits of milk and milk products, in particular cheese and yogurt, in the battle against osteoporosis.

In spite of the many challenges in 2009, the year has been one of significant advance and progress for the NDC.

In 2010 the NDC intends to continue to drive and stimulate the consumption of milk and dairy products in the Republic of Ireland. The year will also form the mid-way point of its strategic action plan, with a palpable sense of momentum gathering. “We certainly hope that 2010 will see a recovery of confidence leading to a brighter outlook for the entire industry,” concluded Helen Brophy.

Sources of information:-
- Nielsen, 2009
- CSO Consumer Price Index
- BMR Ltd.

 

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