TRENDS
In 2012, the Danish drinking milk products category witnessed some turbulence as the result of a price war in milk, which broke out when Aldi reduced the price of several kinds of drinking milk to around DKK4 per litre. This increased the price gap between branded products and cheap private label and thus posed a threat to leading player Arla Foods Amba. At the same time, sales of organic milk were hit hard. Given this background, 2013 was calmer and marked a return to a more “normal” situation. Arla sought to fight back by intensifying its marketing activities so as to regain some of its lost sales. Prices increased again and organic milk regained its momentum and started growing again.
1% current value growth in 2013 was better than the 1% CAGR decline of the review period. The difference can be attributed to two factors, which negatively impacted the review period average. Firstly, the financial crisis led to a sharp drop in sales in 2009, while secondly a price war in milk resulted in falling unit prices and value sales in 2012.
Fat-free fresh/pasteurised milk was the best performer in 2013, posting current value growth of 3%. This represented the continuation of a trend which made its mark over the review period. Health concerns are seeing adults opt for fat-free milk over semi-skimmed milk. Consequently, semi-skimmed and full-fat milk are becoming products which are primarily used for cooking and as drinking milk for children.
Average unit price in milk dropped by 3% in 2012 due to a price war initiated by the discounter Aldi, which lowered the price of several kinds of drinking milk to DKK4. After the end of the price war, prices started to increase again, with renewed growth in organic milk having a positive impact on average unit price in 2013, which rose by 1%.
Children’s drinking milk is of no great significance in Denmark. This can be explained by the fact that Danes are generally suspicious of such products, believing that they are either over-priced or less healthy (if sweetened).
Flavoured milk drinks in Denmark is largely dominated by chocolate milk, which is most often sold ambient. More precisely, ambient products accounted for 67% of volume sales in the category in 2013.
Milk is subsidised in kindergartens, schools and other child-oriented institutions in Denmark. Parents still have to pay but due to subsidies prices are lower than they would have been otherwise. The Danish Dairy Board administers a school milk scheme with participation of more than 70% of Danish schools. The Dairy Board distributes milk directly to the schools and makes it easy and convenient for parents to join the scheme by signing up for school milk for their children and paying for up to half a year at once. Through the school milk scheme, many Danes from an early age get used to drinking milk as a natural part of their everyday life. This habit prompts Danes to also drink milk outside school and after school age, and so the school milk scheme can be said to be one of the reasons behind the high retail sales of drinking milk in Denmark.