Despite its declining popularity in the United States, milk remains a pivotal product for retailers, as grocery shoppers who buy milk tend to buy significantly more groceries in general than those who don’t, according to research reveals by Rabobank, The Netherlands.
As such, milk is a focus for online retailers who have struggled to attract grocery shoppers. Retailer pricing wars, high rates of private label sales, falling sales and growing competition from new dairy-based and non-dairy-based milks reduced margins, making it tough for fresh fluid milk companies to rationalize investments in marketing and innovation.
But, the challenges milk currently faces are forcing an era of flux and self-discovery, driving innovation and development. Investors are getting involved, realizing the depth of potential in the category despite current challenges.
However, margins are thin, and only the most efficient and those with serious differentiation and branding can stay afloat. The good old days of high margin bulk milk are long gone, but there are opportunities for the bold, for UHT milks in developing markets and for premium-differentiated milks earmarked with sustainability and quality in developed markets.