Cultured club: what's in store for the growing UK kefir market?

Kefir is an emerging, but growing, category in the UK. The Covid-19 pandemic has been playing an important, but not exclusive role in amplifying interest in foods seen as a benefit to health. Simon Harvey reviews the market landscape.

With health and wellness now top of the agenda for many consumers, fermented dairy products such as kefir are gaining in popularity in the UK.

Kefir falls into the broader family of fermented food and drink products such as kombucha, sauerkraut and kimchi. In the UK, kefir milk drinks dominate, followed to a lesser degree by yogurt, cottage cheese, quark, and more recently, ice cream. 

However, kefir offers potential opportunities in new areas too, given the depth and breadth of the traditional dairy category, and the onslaught of dairy-free.

The UK retail market for kefir dairy products is dominated by a handful of players – Bio-tiful Dairy, The Collective and Yeo Valley – but other companies are entering the category, including Scotland-based Graham's the Family Dairy and startups mainly operating online or in independent stores, such as Chuckling Goat and Nourish Kefir. 

And, as Chuckling Goat has demonstrated, kefir is not restricted to cow's milk, opening the doors to other animal-based milks, along with free-from ingredients such as soy, oats and coconut.

Overseas businesses are also trying to get in on the UK act – Lifeway Foods in the US with kefir smoothies and ice cream and Finland's Valio in fermented yogurt. Lowicz, Krasnystaw, Milko and Jana, all originating from Poland, are also available in some UK supermarkets.

Acceleration in the lockdown

It's generally agreed among the larger and more established UK players that Covid-19 has accelerated demand for kefir products, given claims they boost immunity as well as a host of other health benefits, but the pandemic has not been the underlying stimulus behind the interest.

"Consumer attitudes are changing and there is more and more importance put on sustainability, the environment and health,” says Molly Benbox, a market analyst at Bristol-based Yeo Valley. “While this is driving a steady increase in the dairy-alternative market, it is also fuelling the interest for organic products and gut health products such as kefir."

That said, the coronavirus has probably brought further impetus to a category that was already growing, albeit still in the nascent stages of development as far as the UK is concerned. And the upward trend in kefir is expected to remain beyond the crisis.

Hamish Renton, the managing director of UK-based food and drinks consultancy HRA, says: "We've been on the kefir bus for probably two to three years but I think lockdown particularly has accelerated matters. It's part of a general trend towards fermented foods and that is manifest in things like sourdough, kimchi and kombucha. They are all things that are on the up as it were and they are all things that are broadly the same because they are all about gut health."

Kefir is a probiotic similar to yogurt in that it contains naturally occurring 'good' live bacteria, along with yeast. Prebiotics feed the friendly bacteria and are a type of fibre naturally found in vegetables, fruit and legumes.

In the manufacturing process, kefir grains, which contain sugars, lipids and proteins, are added to fresh milk to foster fermentation, while carbon dioxide is omitted to create the 'fizz' present in varying degrees between brands. 

Kefir products in a UK supermarket

A source of magnesium, phosphorus and calcium, kefir also contains vitamins such as A, B2, B12, D and K, and is gluten-free, low in lactose and with no added sugar, making it an alternative to supplements and probiotic tablets.

Kefir is said to offer health benefits such as boosting the immune system, lowering blood pressure and cholesterol, aiding depression and combating obesity.

In a 2017 report, London-based The Nutrition Society said scientific studies had supported the health benefits of kefir. However, it noted there is a "need for systematic clinical trials to better understand the effects of regular use of kefir as part of a diet, and for their effect on preventing diseases".

Its list of health claims is lengthy too. "Regular consumption of kefir has been associated with improved digestion and tolerance to lactose, antibacterial effect, hypocholesterolaemic effect, control of plasma glucose, anti-hypertensive effect, anti-inflammatory effect, antioxidant activity, anti-carcinogenic activity, anti-allergenic activity and healing effects,” the report read. “A large proportion of the studies that support these findings were conducted in vitro or in animal models."

A growing market for kefir

Natasha Bowes, a Russian national who founded Bio-tiful in 2012/13, estimates the liquid kefir category in the UK is worth around £40m, compared to about £2m at the start of 2017. "It's been a stratospheric rise", she says. “There's a lot yet to deliver to the consumer, most importantly with maximum relevance.”

Even with the uncertainties created by the coronavirus and the influence on shopping behaviours, Bowes still expects Bio-tiful to double sales in 2020 as the business has done for the "last few years".

Renton says the UK kefir market, which he estimates is 90% drinks, is "incredibly fast-moving" with growth rates of around 30-40% plus a year. "I think this product genuinely is not a fad. It's a science that's in its infancy and I think has got a long way to run."

However, a potential drawback, as with vitamins and supplements, is kefir products tend to be pricey, with a lack of scale economies and their positioning as premium products factors.

Some of the more established UK kefir liquid milk brands can be purchased for around £1.45 for a 250ml bottle and as little as 90 pence for a bigger format from one of the Polish manufacturers. A 500ml Bio-tiful drink can cost £2.25 in Sainsbury’s, the UK’s second-largest grocer by sales. The cost for yogurt pots is anywhere from £1.00 to £2.00 depending on the size, and quark, similar to cottage cheese, is retailing for around £1.20 for a 130g pot.

Kefir is here to stay, it's a trend that doesn't look to be going anywhere.

However, kefir products are expected to become cheaper as more players enter the category, and of course consumers, according to Bio-tiful, which is one of the more diversified producers with a portfolio encompassing drinks, quark, yogurt and ice cream in varying packaging formats.

Even so, Bowes says there's a fine line between pushing down the price and maintaining the value proposition. 

"It's very important too not to drive the value out of the category because at the end of the day it's fundamentally the quality of the product and the added value that's delivered through not compromising on the ingredients, the quality etc. that fundamentally delivers the goodness," she claims.

Robert Graham, the owner of Graham's The Family Dairy, which recently launched kefir milk drinks under its Goodness brand, agrees Covid-19 has accelerated the interest in kefir but it was a long-term trend already in place based around the attributes of "provenance, natural and protein".

"Those are the sails that we have attached our business to. Certainly, Covid-19 has put a bit more wind in those sails because at the start people weren't buying healthy products. In the first few weeks of Covid-19, people weren't buying protein products they were buying bulks of butter and bacon. So I think kefir fits in well with those sails, one of them being health," Graham says.

Yeo Valley, a UK dairy company that has branched out into kefir, making kefir yogurts and ice cream in the category, says it has experienced unprecedented demand for its fermented yogurts during the pandemic.

Benbox expects a similar pattern to continue not just because of the growing appetite for health products but also as the "new normal" of people increasingly eating at home becomes a more permanent habit.

"Kefir is here to stay, it's a trend that doesn't look to be going anywhere. Kefir innovation is now popping up in multiple categories outside of yogurt and yogurt drinks," she says.

"In recent years we've seen a shift towards benefit-led, positive health areas such as gut health and away from products focusing on 0% fat, for example. Consumers are becoming more focussed on what is 'in' their yogurt rather than what's been removed. Kefir does just this."

A healthy agenda 

However, opinions differ as to whether kefir products outside of drinks can have the same appeal. For instance, Graham has reservations around ice cream and yogurt but is generally positive about the future of the category as a whole.

"There's probably a few sales attached to kefir beyond health but gut health is a big trend and it's going to get bigger," he says. "Some of the retailers are going to put some very heavy weighting behind gut health, potentially as a separate category. So there's more to come."

Renton believes that "anything in that sort of dairy space is fair game", although he has mixed views on kefir cheese because invariably people want to consume cheese for specific eating occasions, like on crackers.

"I think there is a long way to go with kefir," he says. "There's probably stuff people are working on that hasn't broken yet. There's some big brands out there that haven't really broken through, and it will be interesting to see what they come up with when they land."

Bio-tiful is one such company with innovation plans in the pipeline beyond its current line-up. But Bowes is, as you’d expect, coy on offering any details ahead of the launch.

"I actually see a number but because they haven't yet launched in the market I'm not in a position to talk about it," she responds when asked what the next emerging kefir category might be. "Ask me again at the end of October."

Getting more people to try kefir products is all about education around the health benefits, according to Bowes. Bio-tiful is attempting to do that through on-pack information, using research to gain insight into what consumers want, and catering to the occasions and formats that work best for them.

Health is getting further and further to the top of [people's] agenda.

Renton alludes to overcoming the price barrier. "It's a simple product but a complicated sell, because you've got to get people dialled into gut health and if they are not dialled into gut health to begin with then it's difficult to sell the benefits of kefir, because it is expensive for a milkshake."

He also puts forward a proposition that UK kefir manufacturers might not want to hear. Kefir, he says, is “fairly straight-forward to make" at home. However, the same could be said for baking and prepared meals, for example, but consumers are still buying cakes, biscuits and ready-meals through retail stores, and using recipe-box delivery services.

Of course, people have more time on their hands with more working from home or some who have unfortunately been furloughed. However, with kefir essentially a product geared toward health and wellness, it's difficult to imagine consumers wanting or even willing to mess with making their own.

Bio-tiful, however, details on its website the ingredients needed to make kefir along with step-by-step instructions, a clever marketing tool to get more consumers to try the product and a mark of transparency.

Whether people are targeting kefir as part of a healthier style of living or not, or specifically to address gut issues, taste and enjoyment will be key factors determining its continued success as new products emerge.

Affordability will also be a consideration, with prices likely to come down as the supply and demand dynamics change with more players coming onto the market. A recession won't be an obstacle either, according to Bio-tiful.

"Interestingly enough, unlike any other recession that we've previously lived through, people do not seem to be turning away from health, in fact quite the opposite," says Bowes. "Health is getting further and further to the top of their agenda."

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