Have Morrisons launched a ‘game changer’?

Published 14 August 15

Morrisons ‘new brand’ will allow consumers to pay 10ppl more for their 4-pint semi-skimmed or whole milk – with the extra going back to farmers. This could be a shrewd move with 79% of consumers saying they were willing to pay more for milk providing the additional money is passed directly to farmers, according to an AHDB Dairy survey carried out by YouGov.  In the current climate, any move that injects more money into the industry is welcome and, for the first time, giving consumers the chance to use their purchasing decisions to directly support dairy farmers is a move that should be applauded.

As the chart shows, only 18% of those surveyed said that they would be prepared to pay over 20p more than they currently do for a 4-pint bottle and the Morrisons move equates to a nearly 23p increase. In addition, we know what consumers say they will do and what they actually do when it comes to paying at the tills can be different.

Another factor is that the premium will be split across Arla members. This means those farmers supplying Morrisons via Dairy Crest and Grahams will miss out. It also means, due to the co-op ethos, GB Arla members will share the benefits of the new brand with all of their European counterparts. So the short-term impact on the individual farmer could be quite small.

However, there is the potential for more British farmers to benefit longer term. If the brand is truly successful it has the potential to be a ‘game changer’ in the liquid milk market. Other retailers could follow suit with similar products and the benefit to farmers would increase if sufficient volumes of milk are sold.  Whether or not it proves to be a success, the challenge will still remain for dairy farmers as to how they cope with volatile prices driven by global commodity markets.