October 8, 2022
Milk from cows now more expensive than dairy alternatives in the UK
Cow's milk has become more expensive compared to dairy-free alternatives in the UK, due to the cost-of-living crisis there, Bloomberg reported.
Four of the largest supermarkets in the UK charge an average of GBP 1.25 (~US$1.40; GBP 1 = US$1.12) for a two-pint bottle of own-brand milk, a 36% increase since January. According to retail research firm Assosia, the closest comparable own-brand substitutes, which come in one-liter bottles, cost GBP 1.05 (~US$1.17) for soy milk, GBP 1.07 (~US$1.20) for almond milk, and GBP 1.24 (~US$1.39) for oat milk.
Oat milk is an example of a plant-based product that typically costs more than cow's milk, and some cafes have come under fire for doing so. Even vegan activists and customers with lactose allergies have criticised the fees as being unfair.
The cost of producing milk has increased to a record high as a result of rising prices for everything from food to utility bills. Other dairy products have seen significant price increases, and security tags are now required on Lurpak butter to prevent shoplifting of pricey goods.
When branded products are considered, the pricing disparity is not the same. An analysis of Trolley.co.uk data found that includes both branded and unbranded goods, milk costs GBP 1.71 (~US$1.91) on average, the same as oat milk and a bit less than soya milk (GBP 1.73; ~US$1.94) and almond milk (GBP 1.78; ~US$1.99).
Nevertheless, every analysis shows that this year's biggest price increase in cow's milk. The two most recent iterations of Bloomberg's monthly Breakfast Index also revealed that among ingredients for fry-ups like eggs, butter, sausages, tea bags, and bread, milk saw the biggest increase.
Long term, as supermarkets release their own-label, less expensive versions of popular brands like Oatly and Alpro, the average price of non-dairy milk is decreasing. Cow's milk, on the other hand, underwent that process long ago when supermarkets began offering it as a loss-leader to attract customers, said Susie Stannard, consumer insight manager for the dairy industry at the Agriculture and Horticulture Development Board, a group that advocates for farmers.
Stannard said that although cow's milk is still less expensive, the prices are getting closer and the cost-of-living crisis is likely to speed up this shift.
Consumers have already changed their shopping habits as a result of higher shelf prices by choosing cheaper own-brand items and going to discount supermarkets. Richard Lim, CEO of Retail Economics, said consumers may switch to non-dairy products based on price now that the price of milk is gradually rising above that of its formerly premium competitors.
Lim said he wouldn't be surprised if people tried other products if the alternatives are at a significantly different price point from dairy products, adding that there are so many options, and the market is new and has grown rapidly over the past five years.
When it comes to supermarket pricing, milk is one of the most competitive products, along with other essentials like eggs and cheese. It serves as a benchmark for consumers, and supermarkets work to keep prices low to maintain market share. Lim said the increasing cost of milk is evidence of just how much pressure the retailers are under.
The cost of cattle feed, fertiliser, and fuel, along with energy prices, are some of the factors putting pressure on milk prices. The production and transportation of fertiliser, which is used to grow cattle feed, have been impacted by Russia's invasion of Ukraine, and in Europe, more than 70% of fertiliser production capacity has been reduced as a result of rising natural gas prices, which are the main ingredient in most nitrogen fertilisers.
The cost of feed, fertiliser, and fuel increased as a result of the extremely dry weather, according to Arla Foods, the largest dairy producer in the UK.
A spokesperson for Arla stated that input costs "have all risen significantly, and like everyone, farmers are also seeing the drastic increase in energy prices."
Data from Kantar Worldpanel showed 95% of British households continued to purchase cow's milk over the course of the previous 12 weeks, while only 22% did so for alternative milks.
- Bloomberg