Return of the Milkman
Does dairy’s future lie in DTC sales?
Overhauling your business model is rarely a snap decision. But the advent of lockdown meant dairy businesses didn’t have the luxury of time. Their long-standing channel mix changed, quite literally, overnight.
In retail, dairy was being cleared off the shelves. Cheese sales soared more than 10% in value and volume over the full year [Kantar 52 w/e 12 July], driven heavily by the movement of 170 million out-of-home lunches back into homes. Meanwhile, the home baking boom pushed up value sales of butter and other yellow fats by 10.2%.
At the same time, the foodservice supply chain ground to a near halt. AHDB estimates the disruption led to an estimated eight million fewer litres of milk being sold each week.
For large dairy suppliers, mitigating revenue losses was a relatively simple matter of convincing retailers to take extra supply. For smaller dairy businesses with less sway over the mults, however, survival depended on swift contingency plans.
The milk round
Of course, not everyone in dairy is new to DTC. Milk was, essentially, the original star of the model. By the early 1970s, practically all UK households got milk to their doorstep. But by the 1990s, the figure had dwindled to 3%, according to Dairy UK. In recent years, the milk round has been coming back. And the pandemic has boosted the channel.
McQueens Dairies was already ramping up this side of its business. This year, it had committed to investing in a new dairy, opening new depots and hiring 100 more workers. Then lockdown measures were introduced – and a spike in demand ensued. Users comprised “a combination of customers who had already been looking for a doorstep delivery service and those seeking a safe and reliable alternative during lockdown”, says chairman Mick McQueen.
“New customers continue to come to us, even after the easing of lockdown,” he adds. “The case for the return of milk to the door has been proven.”
That long-term confidence is echoed at Müller’s market-leading service, Milk & More. It signed up 85,000 online customers in the first eight months of 2020 – more than it did during the whole of 2019. “We experienced unprecedented demand for our service,” says Milk & More CEO Patrick Müller. “At one point we were making 1.3 million deliveries a week.” Deliveries have since dropped off but only slightly, now averaging at 1.2 million per week.
