Butter and spreads overall enjoyed strong growth during 2020 as a result of the pandemic due to the home seclusion trend, with greater time spent at home enabling Australians to cook from scratch. However, this trend has been mainly driven by butter, which increasingly enjoys a more positive perception amongst some consumers due to its less processed image, resulting in predictions for further demand through retail in 2021 as consumers continue to work from home due to further restrictions in Australia amid rising cases of the virus.
While still recording declines over the review period, the overall size of margarine and spreads is being supported by demand for plant-based spreads in a move away from dairy options amongst vegans or those suffering from certain food intolerances. A growing number of consumers in Australia are turning towards a plant-based diet in line with the rise of flexitarians who are trying to reduce their reliance on animal-based products.
Butter and spreads is predicted to remain a fairly consolidated competitive landscape in 2021, led by Fonterra Brands (Australia) Pty Ltd, which is set to gain further value share through its margarine and spreads product Western Star Spreadable, although its overall strength is supported by its presence within the more dynamic butter with its brands Western Star and Mainland Butter Soft. Overall leading brand Western Star is considered by Fonterra to be a core product that had experienced double-digit growth during 2020 due to the home seclusion trend.
Butter and spreads is predicted to see further declines in terms of demand through retail over the forecast period, driven by ongoing weak performances by cooking fats, and margarine and spreads, and stabilisation in terms of demand for butter, particularly as foodservice demand for the latter is predicted to see stronger volume growth in comparison to retail once the threat of the pandemic wanes, and consumers regain their confidence in returning to cafés and restaurants to socialise, depending on any ongoing restrictions in place.
With a greater focus on sustainability, clean eating and a visible shift towards natural, less processed products, discerning Australians are likely to increasingly demand greater transparency regarding the origins of the butter and spreads that they consume. This trend could further support demand for local products as provenance is predicted to emerge as a significant purchasing factor behind consumers’ decisions over the forecast period.
The continuation of price rises for butter, which will ensure higher value growth (at constant 2021 prices) compared to retail volume growth, will remain of concern over the early part of the forecast period for price-sensitive consumers due to reduced disposable incomes or even unemployment as a result of the pandemic, although this could also result in further share gain for private label from major supermarkets and discounters. In addition, butter could face some competition from categories outside of dairy including edible oils sourced from olive oil or coconut oil, with some perceiving these products to offer a healthier, lower-fat substitute for cooking.
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Understand the latest market trends and future growth opportunities for the Butter and Margarine industry in Australia with research from Euromonitor International's team of in-country analysts – experts by industry and geographic specialisation.
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