In contrast to 2019, when total dairy struggled to find growth due to lacklustre performance in milk and yoghurt, all major milk categories saw retail growth in both spend and volumes in 2020.

A huge increase in the number of people cooking from scratch as a result of the Covid-19 pandemic benefitted virtually all dairy categories, going by a new report from AHDB Dairy, with butter, cream and cheese all seeing double digit growth, with fresh cream the fastest growing category.

According to Kantar Worldpanel, retail volumes of cream increased a massive 22.8% on the year, with shoppers buying the product 14.2 times per year compared to 12.6 in 2019.

Butter benefitted from baking trends, seeing volume growth in retail of +18%. Increases in at-home lunches and sandwiches in particular benefitted sales of butter and cheese. Through 2020, cheese saw volume growth in retail of +15%, with mozzarella, paneer and halloumi, proving most popular while cheddar still accounted for just under half of the volume gains.

Milk saw strong volume growth at +7%, accounting for 65% of dairy retail gains. The uplift predominantly came from increased volume per buyer. Milk at home was boosted by an increase in hot drinks occasions more time was spent at home and less time on the go.

Retail sales of yoghurt also grew by +6% in volume, however this was behind the total market so overall lost share. With health less of a priority and increases in hot breakfasts, yoghurt struggled to find the growth which other dairy categories saw.

The latest outlook from AHDB also expects dairy to continue to do well in 2021, albeit at reduced levels of growth compared to 2020. Consumers are expected to continue cooking more meals from scratch, particularly as budgets are likely to remain stretched and consumer confidence is weak. Working more from home is also expected to bolster sales of dairy products.

As a result the levy board expects milk sales to grow 5% on 2019 levels although they are predicting volume sales down by 1% compared to 2020 which saw a lot of panic buying during the first lockdown.

Similarly, butter and cheese sales are predicted to be above those of 2019, but with smaller volumes compared to 2020.

It is expected that sales of yoghurt will continue at elevated levels in the first half of the year as more lunches and snacks are consumed at home. However, the second half of 2021 and hopefully a return to a new normal could see the return of yoghurt declines of 2019.

In the longer term, the report points to an increased focus on health, therefore producers need to maintain and build on consumer trust. Dairy farmers need to demonstrate key farming values such as good animal welfare, environmental stewardship and expertise through greater communication with consumers to ensure continued demand for their product, it says.