1. Project background and methodology
The project was originally commissioned by the Scottish Government in September 2015 due to the problems facing dairy farmers across Scotland. The project was designed to analyse the current retail landscape, evaluating the amount of Scottish added value dairy products sold across Scotland and GB at both a total market and retailer level. By doing this, opportunities could be identified in the market for processors to produce more added value products to be sold in the retailers both in Scotland and the rest of GB, the ultimate outcome being a greater demand for Scottish milk which in turn should result in higher farmgate milk prices.
For the initial part of the project, two areas of the added value dairy industry were focused on; butter and cheddar. These two areas were chosen for the following reasons:
- size of the markets
- Scottish track record in production of these
- intensive amount of milk used in production
- data quality available
- fewer PGI, PDO and geographical restrictions products affecting these categories, particularly considering the total cheese category where many popular products have EU restrictions on geographical production
This report will go into the long term dairy strategy in Scotland, for both dairy farmers and processors. Its outcomes will be used to assess market opportunities for stakeholders in the Scottish dairy industry.
The data source for all tables and charts for the main report was Scotland Food & Drink and Kantar Worldpanel. Kantar is the leading shopper panel data provider in the GB, with 30,000 contributors across Great Britain and is demographically weighted to census data providing representative total market sales figures across the total FMCG market. Its data is routinely cited as being one of the most accurate measures of the retail economy and used by the majority of Great Britain's major retailers and suppliers.
For the purposes of this project Scotland Food & Drink worked with Kantar to code the database to a SKU level. This was done by carrying out store visits to retailers across the central belt of Scotland as well as using retailers and brands websites. The defined origin was set by Scotland Food & Drink by using the following criteria in order of importance:
- express declaration of milk origin
- express declaration of manufacturing origin
- country of origin indicators with processor code
- processor code with declaration of origin
- processor code with no declaration of origin
Products included in the study included any that were sold in the 52 week period up to 13/09/15. It was noted that in many cases a Scottish processor may have declared GB milk as the source but this was given the benefit of the doubt as being Scottish due to the milk surplus in Scotland and the fact that very little liquid milk is traded large distances. It was also recognised that in cases where the product was considered as British, there may be Scottish milk used in the product and/or the product processed in Scotland; this was not analysed in this study as it was primarily coded through on-pack indicators.