UK dairy companies must continue to strive for innovative production techniques to retain their lead over international rivals, according to a new industry report.
In a study of 27 international dairy companies from Europe, the US and Australia, UK processors were found to be leading the way in efficient production, according to national industry association Dairy UK.
The association sourced information from a report by advisory group KPMG. The report was released on Friday.
The findings come as dwindling raw milk supplies and ongoing EU subsidy reforms continue to force producers to turn to towards value-added production in a bid to boost profits and competitiveness.
With a growing consumer demand for products that can boast health claims such as functional and enriched foods, increasing the value of raw materials will be increasingly vital to the industry's success, the report adds.
The potential of the country's processors to tap this market has been linked to the dominance of major dairy groups operating throughout the country.
The industry is currently dominated by seven major processors in the country. About 90 per cent of total milk processing in England and Wales occurring at plants with a capacity of 100m litres or more, the report added.
As quota restraints are wound down through reform of the EU's Common Agricultural Policy (CAP), processors in both the EU and UK will have greater technological means than rival markets to cater for consumers needs, the report stated.
However, this competitiveness had come out a cost for the UK, particularly for smaller businesses, the report stated.
According to estimates, about 100 companies had sold up or gone bust, with a further 50 plants and distribution depots also being axed as co-operatives and larger processors took hold.
The improved focus on research and development remains vital to UK dairy companies and their wider success in the EU, the report stated.