This half-year review of Euromonitor International’s Dairy Products and Alternatives data provides analysis of the biannual update to Euromonitor’s Forecast Model (FM), alongside the quarterly update to the Macro Model, offering insight into the most important developments since August 2022’s annual update. The strength of the US dollar compared to other denominations and inflationary pressures are the main factors impacting the changing dynamics of the industry.
This report comes in PPT.
Dairy products and alternatives’ retail value sales were downgraded in current USD 2022 retail terms mainly due to the strength of the USD against other denominations. The largest downgrades are seen in Japan, the UK and Turkey. Retail volumes were upgraded, however, as drops in retail volume sales were more moderate than the forecasts estimated in the August 2022 baseline data.
The US had the biggest volume upgrade with almost all categories being adjusted, as consumer spending remained resilient despite the skyrocketing prices. Fresh milk in particular was the biggest winner as in-home consumption continued well into 2022. Plant-based dairy volume sales however were downgraded as flexitarian consumers simply moved towards cheaper fresh milk.
Western Europe markets, namely the UK, Italy and Spain, and China led the volume downgrades. Consumer spending for dairy products and alternatives in Western Europe was impacted by a 19% inflationary hike in the EU’s milk prices. On the other hand, the extended lockdown situation in China further aggravated the financial hardships of consumers on the whole, forcing many to reconsider their buying habits.
Navigating the inflationary environment includes portfolio rationalisation from companies such as Nestlé as well as investing in strong growing categories such as coffee whiteners. Promotions offer relief for budget-strapped consumers. However, having a premium and sustainable positioning still attracts consumers willing to pay more for products aligned with their values. Clearly communicating the added value will be essential to succeed in these cases.
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