Coca Cola invests further in dairy – could the UK get a look-in?

Published 11 February 16

Coca Cola is continuing to invest in added-value dairy products around the globe, aiming to expand its portfolio of beverages. In January, it launched a pilot of its flavoured milk drink “VIO” in India and announced a new investment in a dairy, juices and snacks business in Nigeria.

Coca Cola’s dairy range already includes filtered milk and high protein shakes in the US, as well as iced coffee and chocolate milk in Australia. Some of its biggest dairy brands are made from local milk in the country or continent where they will be marketed, often in partnership with a local dairy processor.

So could the UK attract investment in the added-value dairy sector from a global company like Coca Cola?

The UK’s flavoured milk market is worth around £280m and increased 2.5% in 2014/15, according to Mintel. The biggest contributor to this growth was the launch of a new product, Weetabix’s breakfast drink, suggesting there is room in the UK market for innovation.

Coca Cola’s move into dairy has partly come through working with existing dairy processors to minimise its investment risk. The lowest cost option would be a partnership with an existing flavoured milk plant that could contract pack the product. The UK has limited capacity in this area, particularly if a new product was launched with the potential to reach large volumes. However, alternative options would be to add a packing line to an existing dairy or encourage a fruit juice packer to expand into dairy. Both of these could be achieved in the UK with limited additional investment.

The UK has plenty of milk available at internationally competitive prices, a growing flavoured milk market and options to adapt existing processing plants – it could position itself as a serious contender for investment in added-value dairy from a global drinks company.