Health and innovation taking organic dairy mainstream

Related tags Organic dairy Compound annual growth rate Germany

Rachel's Organic, a leading UK producer of organic dairy products,
says that the growing appetite of British consumers for healthy,
innovative products is helping sustain growth in the burgeoning UK
organic dairy sector. Tom Armitage reports.

The company​, which last week announced the completion of a £3 million extension at its main milk processing plant in Aberystwyth, Wales, is looking to treble its current output of 10 million pots of organic yoghurts to cater for the growing UK trend for organic dairy products.

"Organic dairy is here to stay, it is not a transient phase,"​ Neil Burchell, managing director of Rachel's Organic told​.

"Consumers are increasingly checking labels for the nutritional values of products. A lack of additives, a need for natural ingredients, as well specialist dietary preferences, such as low-carbohydrate content, are all factors appealing to the modern British consumer,"​ he added.

But although consumer demand for healthy and natural products has been a major factor in the growing interest in organic dairy products, Burchell also noted that sales had been boosted by the increasingly sophisticated tastes of the average UK consumer.

Rachel's Organic, for instance, has recently rolled out a number of innovative organic products such as rice pudding, which would not traditionally be associated with the organic dairy sector, in a bid to diversify and push organic products into the mainstream arena.

Amarjit Sahota, director of organic industry analysts, Organic Monitor​, confirmed that innovation on the market - in flavours in particular - continued to be the driving force behind the sales growth of organic products.

"Only a few years ago, organic dairy products were confined to a couple of flavours, whereas now there are over 30 available,"​ Sahota noted.

He also highlighted the noticeable difference in the marketing of organic dairy products in the domestic UK retail sector compared to their European counterparts.

"In the UK, organic dairy has gone mainstream, now appearing across a number of multiples and commonplace retail outlets,"​ he said.

"But in other European markets, for instance Germany, organic dairy products are still very much confined to the niche retail sector, appearing predominantly across smaller specialist health food outlets,"​ he added.

Getting into the mainstream is one thing, but staying there is quite another, according to Burchell. "In a crowded market place, the major supermarkets are the key to the success of regional companies like Rachel's because they are so powerful,"​ he said.

"The more responsible retail giants recognise the significance of this but it is an uphill task for a small company to ensure that sales are maintained and listings are retained and improved,"​ he added.

According to Organic Monitor, the UK organic dairy sector was valued at £193 million (€276 million) in 2003, with a projected compound annual growth rate of 7.6 per cent over the next six or seven years. This year, sales are predicted to around 12.5 per cent higher than in 2003.

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