Arla Foods, the dairy co-op behind the popular butter brands Lurpak and Anchor, has recently introduced a new 200g block size to the UK market. This represents a 20% decrease in weight compared to the phased-out 250g block size, which initially upset some UK consumers. However, the smaller blocks were being sold at a lower price, although the current price for a 200g block of Lurpak Slightly Salted is between £2.00-£2.25 online, slightly lower than the old 250g block size which was priced at around £2.70.
The move was prompted by rising inflationary pressures on the cost of butter over the past year. According to Arla Foods’ annual report, UK block butter volumes declined by 5.5% in 2022 while spend (22.7%) and price (29.8%) increased YoY in the UK. Lurpak also experienced a volume decline, driven mostly by price increases.
Danny Micklethwaite, VP marketing at Arla Foods, explained that the smaller pack size was an attempt to bring the branded butters to a more accessible price point. He added that the change was based on consumer research, which involved over 2,500 shoppers to determine the best pack size and pricing options. Since the introduction of the 20% smaller pack size, there has been a proportionate reduction in the unit price for shoppers.
The 200g format is already available in several markets, such as Denmark where Arla Foods is headquartered. However, the decision for the UK market was driven by a desire to drive continued growth within the butter category. Arla Foods is hoping that the lower price point, which is now closer to, if not on par with, that of 250g private label butters sold at discount supermarkets, would be attractive to shoppers.
The targeted return to growth in block butter is also hoped to bring profits to farmers, who have faced sliding farmgate milk prices in recent months. As a dairy cooperative, all profits go back to their farmer owners. However, the business also strives to minimize the inflationary impact on consumers and ensure that farmer owners are able to maintain the supply of products into shops. As such, Arla Foods is working hard to drive continued growth within the butter category, and the research showed that the introduction of a 200g block butter would encourage new shoppers into the block butter category.
