Organic Milk Market Inclinations Exhibit Growing Demand
Posted by Arslan on April 10th, 2019
Organic milk marketplace is marked by relatively low number of players who control a major share of the overall sales of organic milk. The consolidated nature of the organic milk market has put large scale producers of organic milk in an advantageous position. Four Tier 1 companies namely Danone, Fonterra Co-operative Group Ltd., Agropur Dairy Cooperative and Dairy Farmers of America account for a significant share of over 30 percent in the overall Organic Milk Market. With main emphasis on capacity expansion, these Tier 1 players continue to focus on product line extensions by introducing new organic milk derivatives such as organic yogurt and organic infant formula. Joint ventures are a common growth strategy observed among these major players, in a bid to increase their global footprint and serve new regional markets with high growth potential. However, companies in organic milk marketplace have been facing challenges apropos to following safety regulations imposed by different countries regarding organic milk ingredients. Moreover, complying with stringent regulations imposed by FDA and USDA remains a key challenge for these players.
Oligopoly of Tier 2 and Tier 3 Organic Milk Companies in North America Continues
Presence of tier 2 and tier 3 companies involved in the production and distribution of organic milk continues to remain concentrated in developed counties, particularly the United States and Canada. The Kroger Company holds a significant share in the US. Other companies such as Organic Valley, Straus Family Creamery Inc., and Clover Stornetta Farms Inc. hold a major base in the North America region, with an overall share of around 49 percent in the organic milk market. There are exceptions to this trend though – Arla Foods and Groupe Lactalis S.A generate bulk of revenues from organic milk sales in Europe. While over 50% revenues of Arla Foods come from Europe, the region accounts for a whopping 80% share of Groupe Lactalis’ overall revenues.
Development of Organic Food Chains Complementing Sales of Organic Milk
Growing consumer preference for organic foods on the back of increasing lifestyle disorders such as anxiety, diabetes, high blood pressure and stress, has translated into mushrooming of organic food restaurants and cafes worldwide. Entrepreneurs are venturing into the organic space, investing in organic restaurant establishments to cater to the organic food preferring demographic. In 2017, organic food sector services have risen by more than 10 percent, which has complemented to the sales of organic milk on a large scale. According to research carried out by Soil Association, in November 2017 more than half of consumers aged between 18 to 55 years were inclined toward organic food chains. This factor has substantially impacted the demand for organic milk, consequently pushing the growth of the organic milk market worldwide.
Demand for Organic Milk to Spur as Natural and Organic Foods Go Mainstream
Organic milk is derived from cattle that are provided with organic nutrition devoid of antibiotics. According to the World Health Organization (WHO), use of antibiotics in cattle feed can pose adverse health risks to humans in the long run. In addition, awareness regarding consumption of non-organic food and advantages of its organic counterparts owing to mainstreaming of organic and natural food products has resulted in a significant upswing in the demand for organic milk. Moreover, high nutrition value of organic milk, largely comprising omega 3 fatty acids can support cardiovascular health, enhance neurological development and functioning as well as fortify immune system. This factor has propelled the consumption of organic milk, in turn supplementing the growth of its market.
Clean Labels Continue to Influence Organic Milk Market Growth
Clean labels and food and safety concerns are closely related aspects that are witnessing wide acceptance in the organic milk space. Increasing adoption of clean labels in order to rejuvenate consumer confidence regarding the product they consume has impacted sales of organic milk. Moreover, use of clean label in organic milk packaging on the back of increasing preference for GMO free organic milk is expected to trigger its demand in the forthcoming years.
Affordable Alternatives Impact the Organic Milk Market, as High Price Limits Widespread Adoption
Sales of organic milk are expected to witness a slowdown with availability of cheaper alternatives such as soy milk or almond milk. The pricing of organic milk is relatively higher than conventional milk, which is one of the major limitations restricting the growth of the organic milk market. Albeit its higher nutrient value, consumers are preferring organic milk alternatives owing to their low prices. Moreover, milk provided by grass-fed cows features a higher nutrition cap with omega 3 content over 52 percent as compared to organic milk and 147 percent more than conventional milk. These alternatives are likely to result hamper sales of organic milk.
The report on organic milk market provides an in-depth assessment on key players involved in the production of organic milk. Various facets of competition including SWOT analysis, product development, mergers and acquisitions, product portfolio and key strategies of players are covered. The organic milk market report has profiled companies such as Fonterra Co-operative group Ltd., Arla Foods, Clover Stornetta Farms Inc., and Danone.
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About the AuthorArslan
Joined: December 18th, 2017
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