A recent market study by the agricultural board into the liquid milk sector highlighted that despite rising farmgate production costs, pasteurised cow’s milk remains a dietary staple for approximately 80% of households. The report revealed that consumers buying organic or specialized dairy are paying an average of 45% more per litre compared to those purchasing standard supermarket private-label milk. A significant proportion of these consumers exhibit high brand loyalty or habitual buying patterns, rarely comparing prices between retailers.
However, the consumer landscape is gradually shifting due to nutritional trends, environmental concerns, and product innovation. Food tech companies and dairy processors have introduced high-quality plant-based alternatives (such as oat, almond, and soy milks) with improved taste profiles and longer shelf lives, accelerating their adoption in standard supermarkets. Additionally, the development of synthetic, precision-fermented dairy proteins is expected to further lower the cost of non-animal milk options.
To assist the dairy industry's transition and support consumer choice, several initiatives are underway:
With reference to Extract A and your own knowledge, examine two possible reasons for the change in the price elasticity of demand for cow's milk over time.
