Milk prices have been falling across the Isle of Ireland since 2014, with prices predicted to continue dropping. The decline in price has been attributed to a number of factors including the end of the EU Milk Quotas in April 2015, changes in consumer tastes and the rise of discount retailers such as Lidl and Aldi.
The end of the EU Milk quotas means that Irish farmers are free to produce as much milk as they want without a cut in price which, as a result of higher supply on the market, is forcing prices down. This, paired with the rise in discounters, means more Irish consumers are trading in their supermarket brands for discounted equivalents – changing the face of the Irish grocery market.
Do Irish consumers care?
Mintel research shows that over three in five NI and half of RoI consumers do not think farmers currently receive a fair price for the milk they produce. Irish consumers may think that farmers are not paid a fair price for their milk, but how much extra are they willing to pay?
- Most NI consumers are willing to pay an extra 10-20p per 2-litres of milk if it ensures Irish farmers would receive a fair price for their milk: over a quarter are willing to pay 10p more per 2-litre of milk with two in five willing to pay even more.
- Almost three in 10 RoI consumers state they are willing to pay an extra 20c per 2-litre of milk with an additional one in five willing to pay 25c or more per 2-litre of milk.
Offering a fair price to Irish farmers
More needs to be done at the source, where Irish consumers purchase their milk – supermarkets and discounters. In a highly competitive market where supermarkets are competing with not just other multiples but also discounters, it appears that more stores need to break away from the pack and take a stand on ensuring milk farmers are guaranteed a fair price.
In June 2016, supermarket giant Tesco unveiled it’s Fair For Farmers Guarantee scheme ensuring that all of its fresh British milk will be sold at a price that is fair for its farmers in the UK. One month later, Aldi and Lidl stores in the UK set a minimum price of 28p per litre; however the same minimum price was not guaranteed to Irish stores. The Irish Creamery and Milk Suppliers Association has called on Aldi and Lidl not to differentiate between the minimum price it pays for a litre of milk in Ireland.
What we think
More supermarkets in Ireland need to follow suit from UK supermarkets such as Aldi, Lidl and Tesco who have begun to raise the price of their milk in order to support British dairy farmers. There is clear demand among Irish consumers with many willing to pay over 10p/15c per 2-ltre carton of milk as long as it guarantees a fairer price to Irish farmers. Taking the initiative to stand by Irish farmers and raise the price of milk could pay off in the long-term for stores as Irish consumers are known to be highly patriotic when it comes to their purchasing habits.
Emma McGeown is a Mintel Ireland Research Analyst and joined the company in September 2014. Her focus areas include FMCG, technology, retail and tourism within the Irish market.
