The first day of a new dawn for Dairy in the EU?

Wednesday 1 April 2015 marks the first day of a new dawn in dairy and promises to be one of the most pivotal moments in recent history when it comes to dairy production, supply and retail.

The EU’s historic system of milk quotas – which has limited milk production in the EU since 1984 – finally came to an end yesterday (31st March 2015).

It means that EU member states – and their farmers – will no longer be deterred from producing as much milk as they like by the threat of super-levies imposed by EU authorities. Instead, production volumes will be limited only by way of natural forces (including market forces) such as commodity prices, farmers’ ability to invest in their farms and weather patterns.

The likely impact is as yet unknown; member states’ ability to produce more milk varies considerably and their likelihood of benefitting from the ending of quotas is likely to vary even more.

48% of Brits who buy and eat cheese have no preference when it comes to buying British or Irish cheddar

Some countries, such as Ireland, are in a position to increase production beyond the former quota amounts with almost immediate effect. It’s no coincidence, for example, that the Irish Dairy Board, owner of the Kerrygold, Mu cheddar and Pilgrims Choice brands, chose yesterday to rebrand as Ornua – a blend of the Irish Gaelic words for ’gold’ and ‘new’, respectively, presumably reflecting the ‘new gold’ the company sees in the post-quota regime.

Some other EU member states, however, will not be able to increase production so rapidly.

Some UK commentators fear Britain could become a target market for dairy products churned out in other countries and sold at a price which undercuts equivalent British goods. Cheddar from Ireland is of particular concern to British cheesemakers. Against this backdrop, that 48% of Brits who buy and eat cheese have no preference when it comes to buying British or Irish cheddar, according to Mintel’s Cheese UK 2014 report, suggests that if Britain sees an influx of Irish cheddar, British origin alone is unlikely to keep shoppers buying British dairy, especially if more expensive.

Adding value to their milk is therefore key to ensuring British operators can draw value out of any extra milk they produce. Product innovations such as a2 Milk (which some consumers find easier to digest) and protein drink Upbeat are good examples of new and highly innovative products made using British milk and British whey protein concentrate, respectively.

British dairy operators must skilfully blend cutting-edge innovation such as this with strong marketing and exports to make the most of this post-quota era.

Mintel’s Senior Food and Drink Analyst, Richard joined the Mintel UK food and drink team from The Grocer, where he worked for six years, covering meat, fish, poultry, fruit, veg, eggs and seafood, writing news, analysis and features. Prior to entering journalism, he practised as a Solicitor at a City law firm, specialising in commercial risk and property insurance.