Roy Morgan: branded vs own-label milk

Posted by Nicole Eckersley on 23rd March 2011

milk.jpgConsumer research group Roy Morgan has weighed in on Australia’s supermarket ‘milk war’, with new statistics showing that purchasing of supermarket-branded milk is on the rise, particularly in the traditionally branded reduced-fat and no-fat market segments.

15.4 million Australians bought milk in the year to December 2010. According to Roy Morgan, 95% of milk buyers purchased milk over the past four weeks from a supermarket, 13% a convenience store and only 8% from the local milk bar or corner store.

Of those who purchased milk in the last week, half bought at least one carton of supermarket brand milk – 3% more than in 2006.

Branded milk represents as much as 68% of buyers; however, this figure is on the decline, down 8% points since December 2006. The number of people purchasing both home brand and branded milk has also declined – 5% points since December 2006.

Amongst supermarket brands, much of the growth seen over the last 5 years can be attributed to Woolworths products, with the number of buyers increasing 21%, while purchase of Coles milk has remained relatively flat (down 3%).

“The big supermarkets have significant market power in milk, especially in home brands where the current price battle is being fought. This suggests that the winners in the shake-out will be consumers,” said Norman Morris, Industry Communications Director, Roy Morgan Research.

Although the medium to long term impact of the supermarket ‘price war’ remains to be seen, Roy Morgan data shows that before Coles chose milk to spearhead its lower prices strategy, 28% of milk buyers purchased Woolworths milk and only 19% purchased Coles milk.

Roy Morgan said the move away from branded milk can also be seen from a volume perspective; in 2006, 58% of all milk purchased was branded milk, which had fallen to 55% by 2010.

The company’s research suggests that the move to supermarket brands is significantly larger for full-cream milk than it is for low and no-fat milks.

While full-cream milk has more supermarket-brand buyers – 55%, compared to 37% for reduced-fat milk and 34% for no-fat milk – the figures for full cream have remained stable over the last five years.

Reduced-fat, on the other hand, has increased 6%, and no-fat is up 10%.

The biggest shift away from branded milk has been amongst households with children. 73% of this group had purchased branded milk in 2006, while by 2010 this had fallen to 63%.

People living in these households are 36% of the population aged 14+, but account for 46% of the volume of milk purchased — those who buy a lot of milk are more likely to purchase supermarket brand milk than those who buy less milk.

However, within the branded milk market, not all brands are equal, and some are showing positive growth. The number of people who purchased Pauls Smarter increased by 40% and the number who purchased Devondale increased by 69% in the five years to December 2010.

Both products appeal to different markets within the milk category; people who buy Devondale are older and of lower socio-economic status than milk buyers in general while Pauls Smarter buyers are more likely to be professionals, managers and young couples.

“It’s too early to measure the impact of the milk price war, however history has shown that price benefit is not the only factor in drawing loyal brand shoppers from the likes of Dairy Farmers, Pura or indeed Brownes,” said Morris.

“Where marketers seem to have contained the migration to home brands until now, can they hold onto loyal branded milk purchases or will these shoppers also switch to supermarket brands when faced with even cheaper prices? How will they continue to differentiate their brands — with added ingredients for health benefits, premium brand image or by using taste as the unique selling proposition? “