As diary fortunes have been reversed in recent weeks, with prices rising again and production in Europe reached its lowest point since milk quotas ended,  German processing giant Muller has said dairy has the potential to be the grocery sector’s engine for growth for the foreseeable future and promised that consumers, customers and farmers all set to benefit from its new business plan.

On Monday, Muller unveiled plans which it believes can unlock an additional £700m of category growth in the sector by 2020.

As part of the plan, Muller will invest £100m more than its original planned expenditure on operations, development and marketing over the next 18 months. The operations money will be spent on upgrading the capacity and capabilities of the company’s Yoghurt & Desserts production facilities. Marketing will focus on persuading consumers of milks’ health credentials, and improving in-store presence of the groups’ brands, as well as highlighting “changes in population and household diversity to deliver relevant life stage targeted products and innovation."

Muller group chief executive Ronald Kers said Muller is already outstripping Coca Cola and Cadbury’s Dairy Milk in the top-ten most purchased fast moving consumer goods brands. He said, “Now we want to use our leadership position in dairy to rev up the engine and work collaboratively with our customers and of course our farmers to delight consumers and realise the untapped potential that exists to grow this amazing category.”

The company has identified six points for action under its plan. Muller noted that yoghurt consumption is lower in the UK than other European countries, and plans to drive this up as part of its vision. The company also believes that better consumer understanding could bring in an extra £470 million from its fresh milk, cream and milk drinks business by 2020.  

The category is currently worth an estimated £3.3bn per annum, but is undergoing an annual decline of 2%, which Muller hopes to turn around.  

Dan Howell, Commercial Director of Müller Milk & Ingredients commented, “Milk plays the central role in the dairy category. It’s the core driver of both penetration and frequency, bringing shoppers into the aisle to select the rest of their dairy produce. It’s also of huge importance to the UK diet and is rightly viewed as a beacon of healthy, refreshing, enjoyable nutrition."

In May, Muller, attracted the ire of Scottish dairy farmers by announcing the closure of processing plants in Aberdeen and East Kilbride, and forcing suppliers in the north east of Scotland to either cover the extra transport cost of sending milk to the Bellshill plant in North Lanarkshire or else find another processor.