The most important factor shaping butter and margarine in 2017 was the swift rise of butter prices in Poland, by as much as 32%. There are a number of reasons for that extraordinary increase – first of all the abolishment of milk production quotas by the EU in 2015 encouraged Polish farmers to produce large quantities of that product. The creation of large deposits of powder milk by EU organisations resulted in low prices of that product, which is a by-product during manufacture of butter. This led to a reduced supply in 2017 as producers shifted their attention towards more profitable dairy products, such as yoghurts, drinking milk creating a deficiency of butter and a decline in volume sales, despite the practically unchanged demand. As the demand for butter grew, it became more profitable to export the product, further decreasing the domestic supply. This created a situation where prices of butter grew extraordinarily, as retailers and producers were unable to meet consumer demand. In late 2017, trade collusions among major retail chains to keep the prices of butter high and lack of ability to quickly supply the product sustained prices at the unusually high level.
Butter and margarine continued to be led by Unilever Polska in 2017 with a 14% share of value sales, followed by ZT Kruszwica with 13%. These positions can be attributed to strong marketing activities, well-known brand names, good product quality and a longstanding presence in the Polish market.
Over the forecast period, butter and margarine is expected to stagnate, recording a weaker performance than the positive 5% CAGR of the review period. Despite the large growth experienced in 2017, the trend will not prevail over the forecast period as no sudden and major changes in demand or supply of butter took place in Poland. Butter’s unit price, the main reason for the rise in sales value, is not expected to keep on growing, thus changing the situation toward stagnating dynamics once again.
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