Price of milk has jumped 36% since January as inflation soars Thrifty shoppers may seek out plant-based alternatives
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Cow’s Milk Becomes Pricier Than Non-Dairy Alternatives in UK

The cost-of-living crisis has pushed the price of cow’s milk, a staple for households across the UK, above dairy-free alternatives for some shoppers.

A two-pint bottle of own-brand milk now costs £1.25 ($1.38) on average across four of the UK’s main supermarkets, a 36% jump since January. The nearest comparable own-brand alternatives, which come in one-liter bottles, cost £1.05 for soya milk, £1.07 for almond milk and £1.24 for oat milk, according to retail research company Assosia.

Typically, plant-based products such as oat milk have cost more than cow’s milk, with some cafes facing criticism for charging extra for the non-dairy options. Vegan activists and customers suffering from lactose allergies have even complained that the charges are discriminatory.

But now with prices rising for everything from food to utility bills, milk has been hard-hit with the cost of production climbing to a record high. Other dairy products have suffered notable price spikes with Lurpak butter requiring security tags used to stop expensive products from being shoplifted.

The pricing difference is not the same when branded products are taken into account. An analysis of data from Trolley.co.uk including branded and unbranded products shows milk costing £1.71 on average, the same as oat milk and slightly cheaper than soya milk at £1.73 and almond milk at £1.78.

Still, in every analysis cow’s milk has posted the biggest price increase this year. The two most recent editions of Bloomberg’s monthly Breakfast Index also found that milk had the largest rise among fry-up ingredients including eggs, butter, sausages, tea bags, and bread.

Milk Round

In the long term, the average price of non-dairy milk is falling as supermarkets bring out their own-label cheaper versions of big brands like Oatly and Alpro. By contrast, cow’s milk went through that process long ago when grocers started selling it as a loss-leader to pull in consumers, said Susie Stannard, consumer insight manager for the dairy sector at the Agriculture and Horticulture Development Board which represents farmers.

While Stannard still sees cow’s milk as the cheaper option, she says “the prices are getting closer.”

“It is likely that the cost-of-living crisis will accelerate this shift,” she said.

Massive expansion

Higher prices on the shelves have already led consumers to adapt how they shop, choosing cheaper own-brand products and visiting discount supermarkets. Now that the cost of milk is creeping up above its traditionally premium competitors, shoppers may switch to non-dairy products based on price, according to Richard Lim, chief executive officer at Retail Economics.

“If the alternatives are at a significantly different price point to dairy products, then it wouldn’t surprise me that people would experiment with other products,” said Lim. “There are so many different alternatives and it’s a new market that’s expanded aggressively over the last five years.”

Along with other staples like eggs and cheese, milk is one of the most competitive products when it comes to supermarket pricing. It’s a benchmark for consumers, and grocers try to keep the price low as a method of maintaining market share. The rising price of milk “is evidence of just how much pressure the retailers are under,” said Lim.

Feed and fertilizer

Some of the pressure on milk comes from the cost of cow feed, fertilizer and fuel as well as energy prices. Russia’s invasion of Ukraine has impacted the production and transport of fertilizer, used to grow feed for cattle, while in Europe more than 70% of fertilizer production capacity has been curtailed as prices for natural gas, the number one input for most nitrogen fertilizer, has soared.

The UK’s largest dairy producer, Arla Foods, pushed up milk prices in August citing the impact of extremely dry weather on the cost of feed, fertilizer and fuel.

Input costs “have all risen significantly, and like everyone, farmers are also seeing the drastic increase in energy prices,” said a spokesperson for Arla.

Cow’s milk is still by far the most popular option, with 95% of British households buying it over the past 12 weeks compared with 22% choosing alternative milks, according to Kantar Worldpanel data.

— With assistance by Eamon Akil Farhat, Agnieszka de Sousa, and Ben Scent

Bega’s Better Farms Program supports eligible dairy farmers’ by offering up to $1.1 million worth of financial grants each year.

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