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Polarisation and low innovation reflected in additional niche-orientated value proposals
Given the maturity of cheese consumption amongst local consumers, this category saw little change during the 2017-2018 period; added-value imported brands and niche-orientated/gourmet local proposals targeted higher-income local consumers with differentiated cheese options, whilst low-priced brands and Walmart’s private label products continued to gain momentum amongst low- and middle-income consumers, based on pricing strategies and availability. In this polarised scenario there is growing availability of niche-orientated proposals, which range from specialised goat and sheep alternatives to different types of non-dairy cheese options (such as cashew- or almond-based cheese substitutes), trying to create brand awareness and leverage on the current non-dairy dietary movement that keeps gaining momentum amongst well-off and health-orientated local consumers.
Consumption inertia and taste tradition keep cheese sales growing at a stable pace
Despite the growing popularity of dairy-free diets amongst health-orientated and upper-income local consumers, the strong consumption inertia of cheese remains associated with its “addictive” flavour profile, which is constantly reinforced across multiple traditional baked foods and snacks (particularly at breakfast and during the afternoon coffee breaks) and throughout the emerging base of fast food offers, which keep leveraging on the high use of cheese in or with popular alternatives such as pizza and hamburgers. Whilst most consumers have no problem with dairy digestion, people experiencing digestive issues associated with milk tend to find it very hard to give up on cheese, as they feel very attached to its particular flavour and texture, not being capable of finding any relevant substitutes for this food in their daily recipes.
Non-dairy consumption trend expected to gain momentum
As informed local consumers adopt the latest dietary trends, dairy consumption is anticipated to continue losing popularity amongst a growing base of middle- and high-income local consumers over the forecast period, with some people adopting vegan diets, whilst other consumers will simply move away from dairy due to its potentially inflammatory effects and the typical lactose-intolerance issues. In this scenario local consumers on higher incomes are expected to continue moving further from traditional cheese options towards seeds and nut-based cheese substitutes (in particular cashew, almond and coconut-based alternatives) and easier-to-digest alternatives such as goat cheese.
Cooperativa de Productos de Leche Dos Pinos maintains its strong competitive edge during 2018
The local player Cooperativa de Productos de Leche Dos Pinos continued to lead cheese sales in Costa Rica during 2018, benefiting from a vertically integrated cooperative business model that has consolidated economy-of-scale savings throughout its supply value chain, which goes from pastures and animal health to the marketing and distribution of its brands. The company benefits from broad levels of availability across all types of traditional and modern grocery outlets across the country, allowing it to set standards for quality, segmentation and pricing levels.
Sigma Alimentos maintains its strong competitive edge during 2018
Although Dos Pinos lost some value share in 2018 to other, smaller players, second-ranked Mexican company Sigma Alimentos Costa Rica maintained its value share and continued to take advantage of the sales’ inertia with its brands Del Prado and Monteverde, which are capable of challenging Dos Pinos, across modern grocery outlets in terms of segmentation and pricing strategies. The shares of the other players remained relatively fragmented, having a wide mix of local gourmet and economy alternatives competing against a rising base of imported proposals (such as Crystal Farms), which tend to be positioned as relatively affordable, higher-quality proposals in comparison to similar local alternatives.
Differentiated added-value proposals anticipated to gain additional penetration
As the cheese offer becomes more mature and higher-income consumers become more open to trying gourmet and easier-to-digest alternatives, demand for less traditional options such as buffalo, goat (such as the recently introduced imported brand Montchevre) and sheep cheese is expected to gain momentum over the forecast period as players focus on local consumers with more income as well as on tourists and the foodservice channel. In this context, the already mentioned vegan and non-dairy cheese options are also set to gain penetration across a similar base of consumers, who are likely to opt for the latest dietary trends in the coming years.
Additional levels of segmentation continue to emerge across drinking milk products
Despite the maturity point reached by drinking milk products across most segments of the local population, additional levels of segmentation continue to be developed by major manufacturers that keep adopting multiple types of functional ingredients claims to improve the nutritional profile of their new proposals. Whilst the offer of milk alternatives, including soy and almond, continues to increase, the rising popularity of children-orientated alternatives that combine cows’ milk and oats continues to boost the sales performance of such types of alternative value proposals, for which higher-than-average unit prices can be charged in comparison to regular shelf-stable milk.
Indulgence and children-orientated products continue to gain shelf presence
As traditional drinking milk products targeting adults continue to encounter additional resistance to growth, mostly due to the ongoing development of non-dairy consumption trends, major players have opted to focus on children-orientated proposals. Whilst some flavoured milk drinks target adults (such as the imported brands Hershey’s and Cacaolat), the high caloric content of these types of products does not tend to concern younger consumers and children.
Other milk alternatives expected to consolidate over the forecast period
Besides soy milk, other milk alternatives such as almond, coconut, rice and oats are anticipated to gain shelf space across an expanding base of modern grocery outlets, where they will continue to target a growing base of middle- and high-income millennial consumers interested in adopting healthier eating habits. Locally sourced products (such as rice and coconut) should gain traction by offering natural flavoured options targeting both children and adults, whilst more traditional non-dairy alternatives will gain additional momentum through the promotion of seeds and nut mixes such as almond and coconut or rice and oats.
Dos Pinos remains the dominant player
Cooperativa de Productos de Leche Dos Pinos continued to dominate drinking milk products in Costa Rica in 2018, accounting for the vast majority of retail value sales. Its strong competitive edge is the result of its vertically integrated cooperative business model and consolidated economy-of-scale savings that are reflected throughout its entire value chain, from pasture and animal care to its fully consolidated manufacturing and marketing capabilities.
Purchase of the Gallito brand further benefits the leading player
A good example of Dos Pinos’ further brand development can be seen in the recent launch of its flavoured milk drink Morenito, which, besides using the Dos Pinos image, also benefits from the broad popularity of the Gallito brand as a traditional/nostalgic proposal within sugar confectionery. Since Dos Pinos bought Gallito from the international player Mondelez in 2017, it has managed to develop successful and synergic combinations between its two star local brands (particularly within the ice cream category), by appealing to consumers through nostalgic concepts and indulgent proposals that can younger millennial consumers can introduce to their own children.
New international players expected to increase presence
As seen in other major packaged food categories, large regional and international competitors will continue to seek additional development opportunities outside their own home markets, where their prospects for additional growth are relatively low. Within this context the leading Mexican dairy player Lala is expected to enter the local marketplace to challenge the traditional dominance of the local leader Dos Pinos on a major scale over the forecast period.
New line extensions continue to leverage on strong umbrella brands
As local consumers continue to adopt healthier snacking and breakfast habits, yoghurt sales keep developing at a dynamic pace, with child- and adult-orientated proposals continuing to emerge under recognised umbrella brands and through new category debutants. New value proposals keep adopting popular dietary trends, particularly meeting demand for high-protein, low-fat and low-sugar products, with Greek yoghurt continuing to gain shelf space and see new flavour options.
Packaging innovations and functional ingredients claims set the pace during 2018
New product formats, including those with crunchy cereals and granola toppings, keep gaining shelf space in line with Dos Pinos’ new value proposals targeting young adult middle- and high-income consumers, as well as in the case of recognised imported brands such as Dannon and Yo Crunch, which also target younger higher-income consumers. Other major packaging innovations are seen in Dos Pinos’ new line extension Lula Yoghurt, which, besides containing the anticipated natural ingredients and no preservatives (to suit children’s nutritional requirements and local parents’ expectations), also comes in easy-to-carry doy packs, increasing the consumption occasion potential for these products.
Added-value, functional proposals expected to continue gaining momentum
As already seen during the 2017-2018 period, added-value and functional products are expected to continue gaining momentum over the forecast period, as an expanding base of new imported and local products should increase in specialisation based on additional functional claims (particularly in the case of probiotic content and gut health benefits) and innovative formulations. In this scenario the quick development of non-dairy-based alternatives could be seen; coconut-based yoghurt and kefir proposals should begin to target well-off consumers interested in adopting vegan diets or in reducing their consumption of dairy products.
Local dairy leader remains the main reference in yoghurt sales
The local player Cooperativa de Productos de Leche Dos Pinos maintained its dominant value share in yoghurt and sour milk drinks in 2018, leveraging on strong top-of-mind brand awareness throughout all dairy categories, which reflects its vast levels of penetration across all grocery channels throughout the country. This local manufacturer has the capacity to provide deep levels of segmentation and is capable of targeting adult and younger consumers with functional and indulgent proposals and constant innovation, which includes new flavours (and toppings), yoghurt types and packaging formats.
Sigma Alimentos maintains strength with Yoplait
Second-ranked Sigma Alimentos Costa Rica also continues to take advantage of the strong brand positioning of its licensed yoghurt brand Yoplait, which is capable of leveraging on this manufacturer’s economy-of-scale savings in terms of production and distribution on a regional scale. Yoplait brand was very proactive over the last three years of the review period, and 2018 was no exception as it launched a new yoghurt dessert line Placer as well as Greek yoghurt line extensions during the year.
New players and added-value proposals will continue to boost yoghurt sales
A combination of new added-value proposals should continue to emerge hand in hand with smaller niche-orientated players, particularly those with the capacity to target well-off local consumers interested in adopting the latest health and wellness trends. This scenario should also be reflected in the strategy of large-scale regional manufacturers such as Mexican player Lala, which made its dairy debut in Costa Rica during 2018 with its yoghurt offer.
Brand tradition, pricing and availability set the pace
As a result of the overall maturity already reached by most other dairy products amongst average local consumers, innovation and growth rates continued to be very modest during 2018. This lack of momentum can be attributed to the fact that many average middle- and high-income consumers are moving away from high-fat (in particular saturated fats) and -calorie foods, such as what is contained in most other dairy offers, whilst a growing base of health and wellness upper-income enthusiasts are actually staying away from all types of dairy products (including yoghurt), whether they are adopting vegan diets or just avoiding dairy due to their alleged inflammatory and digestive issues.
Little innovation seen in other dairy in 2017/2018
In general the product offer in other dairy remained very similar in 2018 to what it had been in 2017, with no major innovation seen, due to the intrinsic nature of these types of products (based on indulgence and dense flavours). However, there have been a few new added-value alternatives that offer clear differentiation, such as the new NIkkos cream substitute with 0% fat content (having some similarity to natural yoghurt as well), which claims to taste just like traditional cream, but with 40% fewer calories.
Healthier proposals and added-value options anticipated to be the focus
As seen in the dairy categories overall, other dairy producers are expected to pursue more segmentation and specialisation over the forecast period, particularly by developing healthier/functional proposals capable of targeting the growing base of upper- and middle-income millennial consumers looking for such types of innovation. Cultured, probiotic-rich cream as well as non-dairy vegan substitutes (in particular coconut-based creams and desserts), are anticipated to emerge early in the forecast period, offering new concepts for average local consumers.
International company Nestlé maintains its lead in other dairy
Nestlé Costa Rica maintained its leadership in other dairy value sales during 2018. This international manufacturer remained the main reference within condensed milk (which accounts for almost half of the sales within this category), benefiting from the vast availability and wide brand recognition of La Lechera, which has competitive unit prices and a higher-quality image (in comparison to more generic proposals), which appeal to most average local consumers, whilst also leveraging on different packaging strategies to suit different types of consumption occasions and consumer needs.
Local company Cooperativa de Productos de Leche Dos Pinos ranks second with strong double-digit value share
The local Cooperativa de Productos de Leche Dos Pinos maintained its ranking as the second strongest player with a double-digit value share in 2018, benefiting from the vast penetration of its cream brands (Dos Pinos, La Granja, Zarcero and Delactomy), which thrive on having competitive unit prices and broad availability across modern and traditional grocery retailers, whilst benefiting from the economy-of-scale savings derived from this manufacturer’s strong position in the rest of the dairy product categories.
New competitors and added value will continue to emerge
Despite the category’s maturity and the low innovation over the review period, other dairy should benefit from the further development of healthier and more functional proposals over the forecast period. Pricing and packaging innovations should also play a key role in the dynamism of the other dairy offer.
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The Dairy in Costa Rica market research report includes:
Analysis of key supply-side and demand trends
Detailed segmentation of international and local products
Historic volumes and values, company and brand market shares
Five year forecasts of market trends and market growth
Robust and transparent market research methodology, conducted in-country
Our market research reports answer questions such as:
What is the market size of Dairy in Costa Rica?
What are the major brands in Costa Rica?
How has the economic downturn impacted sales performance given its staple food status?
Given mounting obesity concerns, are consumers moving from full-fat to reduced fat/fat-free offerings?
How are volatile farmgate prices for milk impacting retail prices and sales performance?
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Increasing segmentation and new value proposals during 2018
Functional ingredient updates and new value for money proposals set the pace
New added value proposals and Walmart’s Great Value range gain presence
Modern grocery retailers keep gaining ground
Convenient, affordable and healthier options growing in popularity
Sales to Foodservice
Further consolidation based on additional economy of scale savings New auto service model attracting consumers Technological innovations and new distribution centres set to further consolidate foodservice sales
Table 1 Foodservice Sales of Packaged Food by Category: Volume 2013-2018 Table 2 Foodservice Sales of Packaged Food by Category: % Volume Growth 2013-2018 Table 3 Forecast Foodservice Sales of Packaged Food by Category: Volume 2018-2023 Table 4 Forecast Foodservice Sales of Packaged Food by Category: % Volume Growth 2018-2023
Table 5 Sales of Packaged Food by Category: Volume 2013-2018 Table 6 Sales of Packaged Food by Category: Value 2013-2018 Table 7 Sales of Packaged Food by Category: % Volume Growth 2013-2018 Table 8 Sales of Packaged Food by Category: % Value Growth 2013-2018 Table 9 GBO Company Shares of Packaged Food: % Value 2014-2018 Table 10 NBO Company Shares of Packaged Food: % Value 2014-2018 Table 11 LBN Brand Shares of Packaged Food: % Value 2015-2018 Table 12 Penetration of Private Label by Category: % Value 2013-2018 Table 13 Distribution of Packaged Food by Format: % Value 2013-2018 Table 14 Distribution of Packaged Food by Format and Category: % Value 2018 Table 15 Forecast Sales of Packaged Food by Category: Volume 2018-2023 Table 16 Forecast Sales of Packaged Food by Category: Value 2018-2023 Table 17 Forecast Sales of Packaged Food by Category: % Volume Growth 2018-2023 Table 18 Forecast Sales of Packaged Food by Category: % Value Growth 2018-2023
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Gain competitive intelligence about market leaders. Track key industry trends, opportunities and threats. Inform your marketing, brand, strategy and market development, sales and supply functions.