Following an upturn in demand for butter and spreads in 2020 when the home seclusion trend as a result of the pandemic and subsequent restrictions saw many New Zealanders dedicating greater time to cooking from scratch including baking, 2021 is set to see some stagnation in retail volume terms for butter, and a marginal decline for the largest category of margarine and spreads. These predictions are in line with the likelihood of restrictions being relaxed towards the end of Q3, resulting in increasing demand for butter and margarine through foodservice as pent-up demand encourages New Zealanders to spend time outside of the home.
Local consumers are becoming increasingly aware of the environmental impact of production in terms of ensuring that waterways are looked after considering that pollution and GHG emissions (Greenhouse Gas Emissions) from the dairy industry are some of the highest in the world. This is encouraging manufacturers to address environmental concerns including leading butter player Fonterra which launched NZMP's (New Zealand Milk Products) first carbon-zero certified organic butter which has been audited and verified by independent certifier Toitu Envirocare, as it also looks to reduce emissions across the supply chain.
The competitive landscape of butter and spreads is fairly consolidated amongst leading players Upfield Holdings BV and Goodman Fielder New Zealand Ltd due to their dominance of the largest category, margarine and spreads, with respective brands Flora and Meadow Lea, amongst others. However, in line with a predicted weak performance for margarine and spreads, their growth rates are likely to be more subdued compared to those of butter producers including leading player Fonterra.
Retail volume sales of butter and spreads are set to decline over the forecast period, driven by a more pronounced move away from margarine and spreads by consumers as they look for less processed options, and a more subdued performance by butter as restrictions relax, with New Zealanders starting to spend more time outside of the home, including returning to foodservice. Nevertheless, the latter channel is likely to struggle to fully recover to pre-pandemic levels by the end of the forecast period due to the severity of the declines that it suffered in 2020 due to outlet closures and restricted operations.
The early part of the forecast period could continue to see polarising purchasing decisions amongst New Zealanders as price-sensitive consumers opt for private label butter of good quality, while others continue to choose premium variants including organic or artisanal products offered by smaller local players. The share of “others” comprising smaller players regained some lost value share from leader Fonterra at the end of the review period, but the challenge will be to remain profitable when competing with larger companies which enjoy greater financial support as well as widespread distribution across the country.
Westland Milk Products is set to benefit from an investment of NZD40 million by Yili Group of China which acquired the New Zealand butter producer in 2019, allowing it to double its butter manufacturing capacity, including the installation of two new butter churns as the company claims that demand for its products have quadrupled over a period of three years. Named Project Goldrush, the aim is to access the global consumer butter market, including China, while doubling the capacity of Westland’s butter manufacturing capacity to increase production of its premium grass-fed brand Westgold.
Files are delivered directly into your account soon after payment is received and any tax is certification is verified (where applicable).
Understand the latest market trends and future growth opportunities for the Butter and Margarine industry in New Zealand with research from Euromonitor International's team of in-country analysts – experts by industry and geographic specialisation.
Key trends are clearly and succinctly summarised alongside the most current research data available. Understand and assess competitive threats and plan corporate strategy with our qualitative analysis, insight and confident growth projections.
If you're in the Butter and Margarine industry in New Zealand, our research will help you to make informed, intelligent decisions; to recognise and profit from opportunity, or to offer resilience amidst market uncertainty.
This report originates from Passport, our Butter and Margarine research and analysis database.
If you purchase a report that is updated in the next 60 days, we will send you the new edition and data extract FREE! Home Page