Given the complicated economic situation, consumers are very rational when making purchases and look for cheap offers and options. Faced with this situation, private label products, which are concentrated exclusively in the low price segment, registered strong growth in the last years of the review period.
During 2017 and the first half of 2018, the company SanCor registered cheese production levels well below normal. This was a consequence of the financial crisis and the paralysis of most of its cheese factories throughout the country.
Spreadable cheese is the category posting the best performance in 2018 and is expected to maintain retail volumes similar to the previous year. Much of this performance is explained by the large number of promotions such as buy two for the price of one in the main supermarket and hypermarket chains of brands such as Casancrem by Danone Argentina SA.
Given the growing awareness among Argentinians about the benefits of consuming healthy products, companies are keen to position cheese as a possible alternative. The company Milkaut SA was very active in this trend with a large number of advertisements in the mass media.
The company SanCor suffered a deep crisis and was finally sold to Adecoagro SA in mid-2018. However, during 2017, the company divested a large number of factories that produced cheese.
“Others” records a significant retail value share in Argentina, as a result of the large number of cheese-producing companies that exist in the country. According to industry sources, there are more than 600 companies that produce cheese in Argentina, most of them with a long tradition.
In 2018, consumption of drinking milk products recorded a strong fall in retail volume terms for the third consecutive year. Currently, per capita consumption of drinking milk products is at one of the lowest levels in Argentinian history.
Fresh milk registered very poor performance over the review period and was cannibalised by shelf stable milk. This trend is explained by several reasons.
Sales of powder milk were stagnant in volume terms in 2018 after having registered six consecutive years of decline. The main reason that explains the poor performance of powder milk is the constant promotions and discounts for shelf stable milk.
After a year of many rumours, SanCor Cooperativas Unidas Ltda was finally acquired by local company Adecoagro SA after battling several international companies including Fonterra and Lactalis. The company agreed with SanCor to buy 90% of the shares.
The complicated situation involving SanCor Cooperativas Unidas Ltda generated important changes in retail value shares. Although the leading company Mastellone Hnos was the best performer by winning much of the space left by SanCor, many small companies also grasped the opportunity.
Free from lactose milk is the category posting best performance registering double-digit growth in 2018. This excellent performance is due to the fact that many lactose-intolerant Argentinians currently have a greater variety of brands and at attractive prices.
During 2017, the prices of yoghurt and sour milk products increased well above general inflation as companies focused primarily on improving profitability, mainly leading companies such as Danone Argentina SA. Given this scenario, consumption decreased sharply in retail volume terms in 2017, and although at a lower rate, it also decreased in 2018.
Yoghurt and sour milk products is one of the most volatile and sensitive categories to price variations within dairy products in Argentina. Despite the efforts of leading companies over the review period to position it as an alternative to milk at breakfast, Argentinians continue to consider yoghurt as a dessert.
Consumption of FF probiotic yoghurt continues to contract strongly in retail volume terms at double-digit rates in both 2017 and 2018. The level of consumption of FF probiotic yoghurt is at very low levels and far from the volumes recorded in the first years of the review period.
In 2016, SanCor Cooperativas Unidas Ltda sold its yoghurt business to Alimentos Refrigerados SA. Despite the sale, production and distribution was still in the hands of SanCor.
The crisis facing SanCor Cooperativas Unidas Ltda had an important impact not only on sales but also on changes in the composition of the market. In the absence of brands such as Yogs and Yogs Light by SanCor, consumers chose brands from small companies with a much lower price than brands such as Ser and Yogurisimo from Danone Argentina SA.
Despite the sharp fall in sales in retail volume terms, companies continue to make important launches to try to soften the fall in sales. In the first months of 2018, SanCor Cooperativas Unidas Ltda launched SanCor Vida without sugar and reduced in lactose in drinking yoghurt and flavoured yoghurt.
In 2018, sales of other dairy registered for the second consecutive year decline in retail volume terms. One of the main reasons for the fall in consumption were higher prices than general inflation.
The supply of cream continues to be limited in 2018 although the availability on supermarket shelves is better than that seen in 2017. Supply problems are due to the lack of fat, the main input for the production of cream.
Plain condensed milk recorded the best performance in retail volume terms in 2018. This product is mainly used to prepare desserts at home.
In 2016, SanCor Cooperativas Unidas Ltda sold its chilled dairy desserts business to Alimentos Refrigerados SA. Despite the sale, it was agreed that production and logistics would continue to be carried out by SanCor.
One of the main strategies employed by Danone Argentina to try to boost or, if necessary, soften the fall in sales in chilled dairy desserts is through launches of limited edition flavours and advertising on TV. In 2018, the company presented a wide variety of flavours, notably Danette Vainilla de Madagascar (Danette Vanilla from Madagascar) and Danette Chocolate de Bélgica (Danette Chocolate from Belgium).
Danone, Alimentos Refrigerados and Mastellone clearly dominate sales of other dairy products in Argentina. During 2017, Danone capitalised most successfully from the lack of products from Alimentos Refrigerados SA due to the aforementioned complications with SanCor.
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This industry report originates from Passport, our Packaged Food market research database.