Müller has said dairy has the potential to be the grocery sector’s engine for growth for the foreseeable future with consumers, customers and farmers all set to benefit.
The company, which acquired Dairy Crest’s dairy business at the end of last year, is preparing to outline plans to unlock an additional £700m of category growth in the sector by 2020. To help facilitate this opportunity, Müller confirmed that it is to invest a further £100m over and above normal planned expenditure in its operational, innovation and marketing capabilities over the next 18 months.
Capital projects will include installing new filling lines and further upgrading the capacity and capabilities of existing production facilities at its Müller Yogurt & Desserts and Müller Milk & Ingredients businesses. The company said the investment will further reinforce its industry leading capabilities in liquid milk, cream, butter, ingredients, yogurt and chilled desserts.
“The Müller brand is already ahead of Coca-Cola and Cadbury’s Dairy Milk in the top 10 most purchased fast moving consumer goods brands in the UK, picked from supermarket shelves 207 million times each year,” said Ronald Kers, Müller Group Chief Executive.
“Now we want to use our leadership position in dairy to rev up the engine and work collaboratively with our customers and of course our farmers to delight consumers and realise the untapped potential that exists to grow this amazing category.”
Bill Mathieson, Commercial Director at Müller Yogurt & Desserts, added: “In the chilled yogurt and potted desserts (CYPD) sector, we will bring new excitement, innovation and game changing product development to our branded and private label business, which is growing strongly.
“Our branded products lead the category with a 21% share of the £2.6bn market with a retail value of £550m despite not currently being available in some very significant segments of the markets in which we operate. We aim to rectify this, bringing ‘Müllerliciousness’ to the whole branded and private label chilled yogurt and desserts category.
“We see opportunities across the category from health to indulgence, and making CYPD available more often in relevant formats across the day. There is significant potential to introduce new and innovative formats and to increase the number of shopping points in stores where shoppers can buy our products to consume at home or on the go.
“We will bring more inspiration and excitement to the point of purchase and create a more enjoyable shopping experience around the dairy category in stores working with our customers to activate big promotional partnerships like our Olympic partnership with Team GB and Team Ireland this summer.
“We will continue to invest in shopper and category insights and are introducing shopper based design capabilities to make buying our yogurts and desserts simple, pleasurable and easy to navigate for consumers.
“We are excited to be at the start of the next phase in the development of the CYPD category and we are looking forward to working closely with our customers to realise this ambition.”
In fresh milk, cream and milk drinks, Müller said that better shopper and consumer understanding coupled with new investment could unlock category growth of £470m by 2020.
This potential reinvigoration of a category valued at £3.3bn per annum but in decline by 2% value year on year would represent a major turnaround, and according to Dan Howell, Commercial Director of Müller Milk & Ingredients (MMI), Müller is impatient to take this challenge on: “By working closely with our customers to deliver products which tap into the aspirations of our consumers, we can increase the size of this category in 2020 by up to 14% compared to its current value. We are very excited by the strategic customer partnerships we are developing which will lead to long-term growth and value creation.
“Milk plays the central role in the dairy category. It’s the core driver of both penetration and frequency, bringing shoppers into the aisle to select the rest of their dairy produce. It’s also of huge importance to the UK diet and is rightly viewed as a beacon of healthy, refreshing, enjoyable nutrition.
“This is a great platform from which we can work with our customers to lift the shopping experience to match the enjoyment of consumption experience.”
Müller has identified key trends within the category to drive growth. Milk drinks is bucking the decline at +3.7% and Müller said it will add value through innovation, not least utilising the FRijj brand which it believes has the awareness and long standing credibility to reach out to existing and new audiences.
“Over the next few months we will be revealing full category visions for each of the liquid dairy categories; fresh milk, cream, and milk drinks,” said Howell.
“We have the ambition, knowledge and capability to lead the way with insight and investment in both branded and private label innovation to help our retail partners delight their shoppers and unlock long-term growth which benefits everyone in the supply chain.”