Dairy: Towards newer, value-added products

The UK’s dairy sector is undergoing a period of transformation, shaped by shifting consumer habits, economic pressures, and evolving attitudes towards health and sustainability. The cost-of-living crisis, which has dominated retail trends in recent years, has led to significant cutbacks in dairy purchases, with milk and butter among the hardest-hit categories.

According to NIQ data, published in December, milk sales experienced a substantial drop of £223.3 million over the past 12 months, while butter, spreads, and margarine saw a decrease of £63.7m. These figures position milk as the fastest falling category and butter, spreads, and margarine as the third fastest declining in 2024.

The steep price increases seen across these categories in recent years have taken their toll on household budgets, prompting consumers to seek value-driven alternatives.

However, despite these setbacks, early 2025 has brought a more positive outlook. In the four weeks leading up to 27 January, dairy sales saw a 6.8 per cent increase, with food inflation easing to 1.6 per cent – an encouraging shift from the 6.4 per cent recorded last year. This suggests that while consumers have been forced to make difficult choices, demand for dairy remains strong when pricing pressures lessen.

Photo: iStock

The dairy alternatives market is also experiencing a complex period of change. While inflation led to cutbacks on plant-based dairy substitutes in 2023, slowing price rises and an improving economic landscape are expected to support a return to steady growth. By 2026 and beyond, the category could regain momentum, particularly if younger consumers maintain their purchasing habits as they age, Mintel notes.

The dairy alternatives market in the UK is forecast to grow at a CAGR of 17.57 per cent between 2025 and 2030 [Mordor Intelligence, 2024].

Innovation is playing a crucial role in shaping both dairy and its alternatives. Health-conscious consumers are driving demand for functional products such as high-protein yoghurts and natural dairy options, while convenience remains a key purchase driver, highlights a report from Euromonitor.

At the same time, private label is thriving, the August 2024 report from the market researcher adds, as shoppers continue to seek cost savings in the face of economic uncertainty. Discounters and value-driven retailers are benefiting from this shift, offering competitive pricing without significantly compromising quality.

“Both traditional dairy and plant-based dairy alternatives are set to experience a period of steady yet stabilised growth, with innovation and new developments maintaining a competitive edge in the local market,” the report states.

Milk and shake: strong momentum

The flavoured milk category continues to show strong momentum within the convenience channel, with total sales now reaching an impressive £324 million [IRI, 52 w/e 07.12.24].

Mars Chocolate, Drinks & Treats (MCD&T) has played a pivotal role in this success, achieving an outstanding 34 per cent growth in sales over the past year and surpassing 13.6 million units sold through convenience stores.

“Our growth in the convenience channel highlights the enduring appeal of our trusted brands and the increasing demand for flavoured milk as a convenient, on-the-go refreshment option,” comments Kerry Cavanaugh, general manager at Mars Chocolate, Drinks & Treats.

“With strong branding, quality consumers trust, and a variety of popular flavours, the MCD&T portfolio continues to help convenience retailers unlock the potential of this growing category.”

While many flavoured milk drinks are ambient and aid stock management, chilled presentation remains key to enticing customers looking for ready-to-drink options, Cavanaugh noted, adding that the MCD&T range, featuring favourites like Mars, Mars Caramel, Maltesers, Milky Way, Twix, Snickers, M&M’s Brownie, and Galaxy, offers broad consumer appeal.

“All products are suitable for vegetarians, with no added sugar, ensuring they cater to the evolving preferences of today’s shoppers,” he adds.

The demand for high-protein products is rapidly growing (see the dedicated feature in this issue), driven by a wider shift towards health-conscious consumption. Protein shakes, once seen as niche products for gym-goers and athletes, have now firmly entered the mainstream, appealing to a broad demographic of consumers focused on their health and fitness goals.

Matt Stanton, Head of Insight at DCS Group, highlights the significance of this trend: “It’s important to remember that many shoppers are looking to boost their protein intake, so retailers should include protein shakes alongside their usual flavoured milks range.”

The protein shakes category in the UK is now worth £103 million and growing at a rate of 13 per cent year-on-year. While it is a key segment across all retail formats, it holds particular importance in the Impulse channel, where it is worth £10.6 million – representing a 10 per cent share of total sales [Circana, MAT 24.11.24].

With more than 66 per cent of sports nutrition shoppers consuming these products at least once a week, and 22 per cent consuming them more than four times a week, according to Mintel research, protein shakes have become a staple for many. This demand isn’t confined to a single demographic – consumers range from 18 to 55+ and represent a balanced gender split [Glanbia Brand Health Tracker, March 2024], showing that protein consumption is a growing priority across different lifestyle groups.

Stanton points to Grenade as the No.1 protein shake brand in the Impulse channel, holding a 41 per cent share. The most in-demand SKUs include Grenade Carb Killa Protein Shake 330ml in Fudge Brownie, White Chocolate, and Cookies & Cream.

Additionally, Optimum Nutrition – widely recognised as the world’s No.1 protein powder brand – is making significant strides in the ready-to-drink segment. As the fastest-growing protein shake brand in grocery, its key SKUs include Optimum Nutrition High Protein Shake 330ml in Chocolate, Strawberry, and Vanilla.

“The protein shakes category is expected to grow at CAGR 16.7 per cent, reaching £277m in the total UK by 2026,” Stanton says. “Therefore, the category will continue to grow in importance throughout 2025 and beyond, and retailers should position themselves to capitalise by stocking a range of Optimum Nutrition and Grenade shakes.”

Future of cheese

Despite economic challenges in recent years, cheese remains a household staple in the UK, valued for its taste, versatility, and nutritional benefits. However, inflation, Brexit-related disruptions, and shifting consumer spending patterns have influenced how frequently and which types of cheese shoppers are buying. While private label continues to dominate, accounting for 60 per cent of total cheese sales (worth £1.8 billion and growing at four per cent year-on-year), branded cheese has shown stronger growth, increasing by 6.6 per cent in value to reach £1.2bn. With branded cheese volume sales now rising at 1.9 per cent YOY, outpacing private label at 0.4 per cent, the category is regaining momentum.

Even as consumers manage tighter grocery budgets, premiumisation remains a strong force in the cheese sector, says Heloise Le Norcy-Trott, Group Marketing Director for Lactalis UK & Ireland, as she highlights several key trends shaping the cheese market in 2025.

“Premiumisation still has the potential to drive market growth. This is likely to come from a combination of new and old consumer habits – exploring new ways of enjoying cheese, like enjoying hot and using it in different recipes, and rediscovering varieties they previously enjoyed,” she comments.

“With cheese being a household staple, it’s important that the industry and retailers continue to adapt, expand, and innovate their offering in the coming months, to cater to changing consumer demands as shoppers get back into cheese.”

“Hot eating is currently one of the highest grossing cheese categories, offering quick and tasty hot meal-time solutions, and another area where retailers can encourage premiumisation,” Le Norcy-Trott explains.

The consumer research preceding the Président Extra Creamy Brie launch found that brie shoppers are willing to pay extra for brie made in France (49 per cent) and extra creamy brie (48 per cent).

“This aligns with a broader consumer trend of seeking affordable indulgence, where quality cheese becomes an everyday treat rather than a luxury purchase,” she says.

With growing consumer awareness of nutrition, cheese is increasingly recognised as a valuable source of protein.

“There is a growing interest in how what we eat and drink affects our bodies – with more than half of consumers reading product labels more than last year. Therefore, one trend to look out for is consumers seeking out cheese for its nutritional benefits,” Le Norcy-Trott adds.

Cheese’s natural protein content – providing 15 per cent of the daily recommended intake – positions it as a nutritious choice. Unlike some plant-based alternatives, cheese contains all nine essential amino acids (the building blocks of protein), making it a complete protein source that supports muscle maintenance, bone health, and overall well-being.

The rise of flexitarian and vegetarian diets is further boosting cheese’s appeal. Hot-eating cheese products, such as melted brie, grilled halloumi, and baked camembert, provide a satisfying alternative to meat-based meals. As more consumers look for plant-forward dining options, cheese is playing a key role in meat-free cooking, both as a protein substitute and as an ingredient in popular dishes.

Platforms like TikTok and Instagram are influencing how consumers interact with cheese, inspiring creative ways to incorporate it into meals.

“With the demand for affordable indulgence driving the category, we can expect a blurring of the distinction between speciality, every day, and recipe cheese, and cheese lovers ‘mixing it up’ with treats like brie on toast,” Le Norcy-Trott predicts.

“While it’s unlikely British consumers will forsake cheddar as the nation’s favourite cheese, they will increasingly want to widen their cheese repertoire, and products like Lactalis’s Leerdammer slices, the number #1 cheese slices brand in the UK in value sales, will encourage them to think ‘beyond the block.’”

“Cheese products combined with naturally herbaceous flavours like chive, onion, garlic, truffle and dill are increasing in popularity, and more specific flavours like provolone, Gouda, and cheddar are satisfying consumer demand,” Le Norcy-Trott says,

“The implications for stores and suppliers too are that they should look across the dairy aisle for inspiration for tomorrow’s new products. They should think too about reducing additives and look for new consumer needs around seasonality or flavours.”

Las month, Leerdammer, the natural cheese slice brand from Lactalis, has launched its new ‘Incognito’ TV advertising campaign – aiming to drive memorability with consumers by tapping into the brand’s ‘Deliciously Different’ positioning and comedic tone of voice.

Reaching over 7.6m ABC1 25-45 consumers, the campaign promotes Leerdammer’s flagship slices range – Leerdammer Original Slices and Leerdammer Light Slices – across BVOD and YouTube advertising.

Yogurt: gut happy

Yogurt experts Yoplait have kicked off the new year with two new reformulated recipes on their leading kid’s brands, Petits Filous and Frubes, to ensure the products are even healthier, yet still retain the same delicious taste.

Since 2015, Yoplait has improved the health credentials of its kids’ portfolio by reducing sugars by 25 per cent. The kids’ yogurt company has been driving the sugar reduction progress within the yogurt category and was applauded by Public Health England by helping the category to reduce overall sugars by 13 per cent.

“Petits Filous and Frubes are well-established and much-loved brands so it’s critical we take a gradual approach to our sugar reduction, and we have done so without resorting to adding thickeners, sweeteners, processed fibres or flavours, but our mission is also to educate about the nutritional value of fortified kids’ yogurts and bring lost consumers back into the category,” said Antoine Hours, General Manager of Yoplait UK.

The yogurts and dairy desserts category contributes a small, 4.5 per cent of the daily free sugar intake of 4-10 year olds and in contrast, more than 50 per cent of free sugars in this age group comes from confectionary, cakes/biscuits and sugar-sweetened drinks, all of which are low in essential nutrients.

Yoplait will continue with its education and awareness campaign into 2025 and its kids’ brands will continue to drive relevance and excitement with consumers. Petits Filous has last month rolled out a fresh new-look which dials up the health credentials of the brand with a focus on bone health and Frubes is running an on-pack promotion offering a once in a lifetime family trip to Japan, a first for the kids’ yogurt category.

“If we are able to re-educate about the positive nutritional benefits, showcase our brands to consumers and encourage them to switch back, we have identified a potential £150m sales opportunity for retailers over the next five years,” added Hours.

Meanwhile, Yoplait has recently launched Yop 500g Strawberry into Booker Cash & Carry, ensuring the availability of the UK’s only drinking yogurt for independent and convenience retailers across the country for the first time.

The flavoured milk category is experiencing huge growth and is expected to be worth £671m by 2028. The total category is currently being driven by the convenience sector, accounting for 44 per cent of total category sales.

In a recent taste test, more consumers preferred the taste of Yop to its flavoured milk competitors.

“Yop is unique,” said Ewa Moxham, Head of Marketing at Yoplait UK. “It offers a delicious flavour and as it is a yogurt drink rather than just flavoured milk, it keeps consumers fuller for longer and our 500g format is perfect for on-the-go consumption”

Yop Strawberry 500g is suitable for adults and children, has a uniquely smooth texture and is a source of Protein, Calcium and Vitamin D, critical to help children and teenagers build healthy bones.

Dairy major Arla Foods has also signalled its ambition to invest and grow its yogurts portfolio by launching three new branded yogurt products in November.

The new products include Arla LactoFREE natural yogurt (400g), Arla Skyr Whipped (128g) – in three flavours – and Arla Protein yogurt, in a larger pot (450g).

Arla LactoFREE natural yogurt offers all the taste of dairy, but with none of the lactose. High in protein and containing added vitamin D, the larger format provides shoppers with the option to enjoy Arla LactoFREE natural yogurt at any time of the day, whether it’s to combine with cereal for the ultimate breakfast, snack on throughout the day, or to add a dollop to cooking for extra creaminess.

Arla Skyr Whipped is a new addition to the Arla Skyr family and comes in three flavours: Strawberries and Cream, Caramelised Orange, and Coconut and White Chocolate. It’s the perfect anytime snack, offering the ultimate blend of feel-good indulgence – protein rich and creamy Icelandic-style skyr, whipped to light and airy perfection, then layered over a fruit compote for a burst of flavour.

Leading dairy protein brand, Arla Protein, has also launched a 450g pot in Vanilla and Strawberry flavours. Containing 45g of protein, the bigger pot is an ideal base for breakfast and snacks.

“It’s been nearly 10 years since we brought our first Arla yogurt to the UK market, and as the UKs largest dairy cooperative, and one of the largest food & drink companies in the country, we are proud to be expanding our yogurts portfolio to offer increased choice for those looking for natural and nutritious food options,” Catriona Mantle, Associate Category Director at Arla Foods, said.

“Health and taste are the biggest reasons that shoppers are generally consuming yogurts, but we also know that shoppers aren’t shopping for ‘yogurts’, they’re shopping for specific occasions. We are therefore offering shoppers a choice; whether they’re looking for a yogurt to meet functional needs, big or small serving sizes, or for a particular level of indulgence. Our Arla yogurts portfolio is growing, but we’re not stopping there, as we have exciting plans to come in 2025!”

Müller Yogurt & Desserts, meanwhile, has stepped up its sustainability credentials, converting its iconic Corner yogurt pots from white to clear plastic, as the business works to halve the environmental impact of its packaging by 2030

The majority of Müller Corner and Müller Bliss Corner yogurt pots have already converted, with the remaining volume taking place by the end of 2024.

Müller said the introduction of fully recyclable clear pots will facilitate the retention of the material for reuse again within the food sector.

Müller UK & Ireland targets on average 30 per cent recycled content in its plastic packaging by 2025, and the business has also confirmed that it is aiming to add recycled content into its clear Corner yogurt pots by the end of 2025.

With Müller Corner seeing 11 per cent value growth year-on-year, and 78 per cent of shoppers preferring a clear Müller Corner pot to a white pot, the move is expected to drive further category growth.

The move follows the launch of Müller’s redesigned branded yogurt and desserts packaging, created to make it more distinctive, cohesive and easy to find and buy.

Cool coffee fix

The ready-to-drink (RTD) chilled coffee category has been one of the strongest performers in the beverages sector, experiencing sustained growth as consumers expand their purchasing habits. Now valued at £316m, RTD coffee continues to thrive, with Starbucks Chilled Coffee leading the market at £157m, holding an impressive 50 per cent category share [Nielsen, w/e 30/11/2024]. Over the past 12 months, the brand has seen an 8.8 per cent increase in value and a 9.2 per cent rise in volume sales, demonstrating the ongoing strength of the category.

“We anticipate that the category will continue to expand in scale for some time yet,” says Adam Hacking, Head of Beverages at Arla, attributing this growth to a shift in consumer preferences, particularly among younger demographics.

“Younger consumers, particularly those engaged with coffee house experiences, are increasingly choosing cold over hot formats. The opportunity exists to enhance this coffee house trend through fulfilling at home and on the go missions across different types of retail and foodservice environments.

While RTD chilled coffee has flourished, there remains untapped potential, he notes. “The hot beverages category is worth in excess of £2bn in retail, and so the cold coffee category has some headroom to go to unlock this opportunity.”

One of the key factors driving RTD coffee sales is taste. Consumers are primarily drawn to the category for flavour, and brands that continuously innovate in this space are seeing the most success. Hacking highlights that sweet flavours, particularly Chocolate and Caramel, are among the fastest-growing trends.

“Consumers are buying into the category primarily for taste and this is reflected in our ethos for flavour quality and innovation. Starbucks chilled coffee inspires consumers to enjoy new on the go beverage moments in a convenient and fresh way,” he says.

At-home consumption is also on the rise, with multiserve formats seeing the fastest growth in the RTD coffee segment. As consumers look for new ways to enjoy coffee beyond the traditional single-serve can or bottle, Starbucks has expanded its Multiserve range (750ml sharing size formats), now offering four core varieties: Skinny Latte, Caramel Macchiato, Caffè Latte, and Cappuccino.

The increasing popularity of larger formats led to Starbucks Chilled Classics Skinny Multiserve being named Product of the Year 2024, further solidifying the demand for take-home chilled coffee solutions.

“Consumers like variety when it comes to chilled coffee, so Starbucks recommends stocking a range of flavours to reach the broadest audience possible,” says Hacking. Must-have lines include Caffè Latte, Skinny Latte and Caramel Macchiato variants in the Starbucks Chilled Classics range, Starbucks Doubleshot Espresso, Caramel and Coffee variants of Starbucks Frappuccino and Starbucks Oat Based Vanilla Macchiato.

Continuous product innovation has played a crucial role in Starbucks Chilled Coffee’s success. Recent launches, including Starbucks Protein Drink with Coffee and Starbucks Frappuccino Caramel No Added Sugar, were named Products of the Year 2025, reflecting consumer demand for new and exciting offerings.

This year, Starbucks continues to push boundaries with new limited-edition releases such as the Blissful Retreat Chilled Classic and Frappuccino Sip On Sunshine, offering fresh seasonal flavours. Additionally, the brand has expanded its plant-based range with Starbucks Oat Based Cappuccino and Oat Based Caramel Macchiato, catering to the growing demand for dairy-free alternatives.

“These exciting additions to the Starbucks Chilled Classics range mean there are now more ways for coffee-lovers to enjoy their favourite Starbucks drinks than ever before, and with new plant-based recipes, deliver that same iconic Starbucks taste as our core dairy range,” Hacking comments.

Meanwhile, Nescafé has collaborated with the ultimate break-brand, KitKat, to create a delicious chocolate flavour latte. Available from mid-December, the Nescafé KitKat Latte combines the best of both worlds, bringing together the rich flavours of Nescafé coffee with the signature chocolatey-wafer taste of KitKat.

It joins a full line-up of other Nestlé confectionery collaborations, including Aero Peppermint and Quality Street Green Triangle. The brand said the line-up is proving to be popular with consumers as both the Nescafé Peppermint Aero Mocha and Nescafé Quality Street Mocha are the top two best-selling new products across in-home coffee [Circana & Kantar, Average 4w/e 02.11.24].

“We are thrilled to continue our collaborations with iconic Nestlé confectionery brands. The chocolatey-wafer flavour of KitKat perfectly complements the aromas of Nescafé coffee. We’re excited to be bringing more unique and indulgent experiences to coffee lovers in the UK,” Ingrid Hayes, Marketing Director for Nescafé at Nestlé UK & Ireland, has said.

“We’re also proud of the fact that real milk goes into the Nescafé frothy coffee range, produced here in the UK at our Dalston site, with milk sourced from dairy farms across Ayrshire and Cumbria.”

Through Nestlé’s partnership with First Milk, the business works with 85 farmers in a dairy operative across Cumbria and Ayrshire to provide high-quality fresh milk for brands made in the UK, such as KitKat and Nescafé Frothy Coffee.

Embracing change

The dairy and alternatives market is evolving rapidly, driven by shifting consumer preferences, economic pressures, and an increasing focus on health, sustainability, and indulgence. While traditional dairy staples like cheese remain household essentials, innovation in formats, flavours, and nutritional benefits is shaping the future of the category. At the same time, the growing demand for plant-based alternatives continues to reshape the market, offering consumers more choice than ever before.

Premiumisation, functional benefits, and sustainability are key themes influencing purchasing decisions. Consumers are seeking high-quality products that deliver both taste and health benefits, with cheese as a protein source and dairy alternatives offering variety for those looking to reduce their intake of animal-based products. Meanwhile, convenience and versatility remain critical factors, as shoppers look for products that fit seamlessly into their lifestyles, whether for quick meals, on-the-go snacks, or indulgent treats.

For retailers, the challenge – and opportunity – lies in balancing tradition with innovation. By responding to changing dietary habits, offering diverse product ranges, and embracing new trends such as hot-eating cheese, plant-based dairy, and globally-inspired flavours, they can drive growth and maintain consumer engagement.

As the market moves into 2025 and beyond, adaptability and responsiveness will be key. Those who can anticipate consumer needs, deliver on taste and functionality, and stay ahead of emerging trends will be best positioned to thrive in this dynamic and competitive landscape.

Milk ahoy!

SPAR Serwent shakes things up with new milk shed

SPAR Derwent in Keswick has become the latest store to introduce an Ann Forshaw’s Milk Shed, bringing fresh whole milk and delicious flavoured milkshakes to the local community.

The new Milk Shed follows successful launches at Ann Forshaw’s Alston Dairy and SPAR stores in Burnley and Milnthorpe.

The vending machine, open 24/7, dispenses gently pasteurised, non-homogenised milk, available in 500ml (£1) and one-litre (£1.60) servings. Milkshakes, priced at £1.80 for 500ml and £2.80 for one litre, come in Chocolate, Strawberry, Banana, Vanilla, and Salted Caramel, with a rotating Limited Edition flavour—starting with Red Velvet for Valentine’s Day.

To celebrate February half-term, a retro throwback range featuring Cream Soda, Parma Violet, Cola, Lime, Candy Floss, and Mixed Berry will also be available.

Eco-conscious customers can opt for reusable glass bottles for plastic-free refills. Plus, recyclable cups and paper straws are available for a greener experience.

“Wherever we launch an Ann Forshaw’s Milk Shed, our SPAR customers love the concept, and we have high hopes that our latest launch will be lapped up by the community in Keswick,” Fiona Drummond, Company Stores Director at James Hall & Co. Ltd, said.

“There is nothing not to like about the product. The milk is competitively priced, and the milkshakes are a delicious treat and suitable for all ages with the conscious decision to utilise natural flavourings.”

There is more to come for SPAR customers in Cumbria this Spring with rollouts of Milk Sheds taking place soon at SPAR Bowness, SPAR Maryport, and SPAR Whitehaven.

Cheese trends 2025

Lactalis cheese market predictions for 2025 and beyond

Premiumisation and innovation: Despite economic pressures, consumers continue to seek out premium cheese experiences. Whether rediscovering old favourites, exploring new varieties, or embracing hot-eating options, shoppers are willing to pay more for quality and versatility. Président Extra Creamy Brie, launched in 2024, highlights this trend, offering a melt-in-the-mouth indulgence perfect for hot dishes.

Protein-rich appeal: With growing awareness of nutrition, more consumers are recognising cheese as a high-quality protein source. Unlike some plant-based proteins, cheese contains all nine essential amino acids, making it a valuable dietary staple. As label-conscious shoppers look for natural, nutrient-rich foods, cheese’s role in a balanced diet is set to strengthen.

Meat-free meal solutions: As flexitarian and vegetarian diets gain traction, cheese is becoming a go-to alternative to meat protein. From recipe staples to hot-eating cheese options, products that cater to meat reducers are seeing rising demand, with convenience and indulgence remaining key purchase drivers.

Social media influence and personalisation: Platforms like TikTok are reshaping food trends, inspiring consumers to experiment with cheese in new and creative ways. From everyday cooking to viral recipe hacks, digital engagement is driving greater interest in speciality and international cheeses, encouraging shoppers to diversify their cheese choices.

Sustainability and provenance: Environmental concerns continue to shape purchasing decisions, with consumers looking for responsibly sourced and plastic-free options. Regionality is also a growing factor, particularly in Scotland, where local brands such as Orkney and Seriously are gaining traction.

Chilled & Charged

Adam Hacking, Head of Beverages at Arla, shares three top tips for retailers looking to maximise seasonal chilled coffee sales

1. Stock recognisable brands with demonstrably high cash rates of sales
2. Offer a range of flavours and pack formats to best meet varying consumer needs
3. Take advantage of opportunities to highlight the category (e.g. POS, promotions and off shelf features)