Arla Foods and Tesco, the UK’s largest multiple, are cutting the price of organic milk products. Coming into force in the summer, the move is aimed at stimulating sales of organic milk & dairy products in general.
“Experience shows that increased sales of organic products often begin with the basic products within a category,” explains Henrik Nygaard, Business Controller in the UK Division “Hopefully this will persuade more consumers to buy more added-value dairy products.”
The agreement with Tesco covers organic milk & dairy supplied under contract by local UK milk producers.
The pace of the UK market for organic milk & dairy products has recently slowed down. Last year sales rose by approximately 40% whereas growth is currently running at around 10 %. This can, in part, be explained by renewed confidence in conventional agricultural products after the UK food crises of recent years.
"Last year organic products enjoyed a boom purely because they were organic,” said Henrik Nygaard. “This is no longer the case. Today organic milk products compete on normal terms against other milk & dairy products.”
In 1993, the then MD Foods introduced a similar price cut in partnership with the large Danish multiple FDB. This resulted in a substantial increase in demand for organic milk products which today accounts for 29% of all Danish milk sales. The equivalent for the UK is roughly 2%.
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